The Process of Due Diligence for A Business
If you happen to be an entrepreneur or a purchase person who has his/her sights on the acquisition of a business, it is your right to inspect the financial records, and research that is company activity related. Due diligence services in India enters the picture at this point and ensures that related information is compiled. It also sees if there is a minimum average which will influence your ultimate decision regarding the acquisition or purchase.
Due Diligence Steps
- The Action Plan: all the parties who are concerned with the deal should agree on what information and issues need to be highlighted so that due diligence is done effectively. The ambit of the issues and information may or may not include structures within the organization, annual legal reports, shareholding records, personal and company financial records.
- Reviewing the finances: The Due diligence team makes it a point to carefully go through the balance sheets of the company in addition to annual reports and cash flows too. All the pertinent files are validated with the help of an accountant and the tax office.
- Asset inspection: If there is a plant and machinery involved in the business, the due diligence team views them as assets, making sure that all of the above are in good working condition. A stock value is recommended before the day of settlement. Insurance plans and policies should also be checked beforehand.
- Scale of prospects and the supply chain: The Due Diligence Team requests the list of key clients to determine if they are active buyers. Existing contracts should also be scanned to find out if future business is possible. Suppliers also fall within the gaze of due diligence and they are verified to see if outstanding payments remain or if there are settlement invoices.
- Level of the competition and reason for sale: As an investor, you will be benefitted to know the exact reasons behind the sale of the company. This will entail a bit of digging around and also observing the competition from other players so that a benchmark can be determined. Industry trends should also not be neglected.
Netrika Consulting India has an expert team of due diligence professionals. They are trained to spot discrepancies in mergers, strategic alliances and acquisitions. Joint ventures, collaborations and partnerships can also be subjected to due diligence. Investigative Due Diligence, Compliance and Governance, Audits, Integrity checks and vendor verification along with social due diligence are some of the key areas that Netrika.in specializes in.