DUE DILIGENCE

DUE DILIGENCE

INTRODUCTION:

                                    Due Diligence is conducted to ascertain whether it is feasible and desirable to acquire/merger a unit. It is a process of review.

        

                                 Basically Due Diligence is used during the course of corporate restructuring. Corporate restructuring may be internal and external. In corporate restructuring more than one party should be involved and in that situation Due Diligence is conducted.

                                Conducting Due Diligence is more important than selection of Target Company, negotiation, pricing of the deal etc. on the basis of the purpose of Due Diligence it is classified as follows:

1.       Commercial/Operational Due Diligence:

                                                                                  During the course of commercial/Operational Due Diligence acquiring company check whether the target is commercial feasible.

2.       Financial Due Diligence:

                                             To check the financial feasibility of the target by examining the financial statement and devising their profit trends.

3.       Tax Due Diligence:

                                   Acquiring company check whether the target company regularly paying their taxes and what are the tax benefit available to the target company.

4.       Informatio system Due Diligence:

                                                              To check whether the MIS is properly worked in the target company.

5.       Legal Due Diligence

                                      Whether the target company has complying all the apilicable laws and regulation.

6.       Environmental Due Diligence:

                                                        Environmental Due Diligence checks whether the target company has complied with all the environmental rule and regulations.

7.       Personal Due Diligence:

                                             Personal Due Diligence is conduct to ascertain whether the employees of target company are competent and efficient.