Due Diligence is a process by which confidential legal,
financial and other material information is exchanged , reviewed and appraised
by the parties to a transaction before such transaction taking place.
What are
objectives for conducting Due Diligence:-
1.
To collect more material information about the
target company.
2.
Conduct SWOT analysis to identify the strength
and to uncover threats and weaknesses.
3.
SWOT analysis improves the bargaining position.
4.
To take an informed decision about an investment.
5.
Identification of areas where representation and
warranties are required.
6.
To ensure accurate and complete disclosure.
7.
Bridge the gap between the existing and
expected.
8.
To enhance the confidence of stake holders.
Types of Due
Diligence:-
There are three
most important types of Due Diligence which are stated below:
1.
Business Due Diligence which is further
classified into following categories
Ø
Operational Due Diligence.
Ø
Strategic Due Diligence.
Ø
Technical Due Diligence.
Ø
Environmental Due Diligence.
Ø
Human Resource Due Diligence.
Ø
Information Security Due Diligence.
Ø
Ethical Due Diligence.
2.
Legal Due Diligence.
3.
Financial Due Diligence.
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