Types of Due Diligence

¿What types of due diligence are there?

Legal Due Diligence

Legal Due Diligence, because of its importance, can be looked up in this link (put link — meter enlace)

In this link you can understand as a whole and in detail the most important points of this process.

Management Team Due Diligence

As a part of the diligence process should, an acquirer will conduct a review of the company management team to determine if the resources that are stipulated to the company are what fit the company needs.

This Due Diligence has to identify three aspects: (1) what key positions are demanded in the operation of the company. (2) What profile is needed to cover these key positions. And (3) if the management team covers these key positions with professionalism.

Financial Due Diligence.

Financial Due Diligence involves looking in three directions. First, you should look back to the past to determine if the trajectory displayed by the vendor transferring the company is true. Second, you should look at the present. This is to say that Financial Due Diligence should verify that the current premises of the negotiation are correct. Finally, Financial Due Diligence should look to the future, which is to say that it should check that growth is possible, rather than just a dream.

Furthermore, you should revise the accounting controls, the systems, and the supervision process. You should also revise the taxation. And last but not least, you should project the cost of the commitments, benefits and compensations made with the workers.

Business Due Diligence

This process of Due Diligence should understand and learn about the business, its sector, the historical growth, the profitability, the most important players, the conditions with which the competition operates

Furthermore, you should analyze the main threats and the main opportunities that the business and the sector offer.

Finally, you should analyze cycles, tendencies, the regulatory environment, specific legislation, if the supply chain is ideal, if the pricing has the proper methodology, and even if the products that the company offers to the market are sufficient.

Management Team Due Diligence

In this Due Diligence the financial questions are no longer valued. This Due Diligence analyzes the processes, the crime prevention procedure, and other procedures demanded by the activity, the quality of available Human Resources, the insurance, and the risk evaluation.

Fiscal and Labor Due Diligence

Normally these Due Diligences tend to be included in the report about Legal Due Diligence. This is because the advisors are common in all three cases.

In fact, both aspects, Fiscal and Labor Due Diligence, are the most likely to be detected. And, the Reps&Warranties tend to revolve around the prescription frames of the responsibilities of these two areas.

Environmental Due Diligence

Depending on the activity of the company, the Environmental Due Diligence can constitute a separate report or can be integrated into the Legal Due Diligence.

If this article has interested you, we recommend the following reading:

Due Diligence and Concealed Flaws

Legal Due Diligence

And if you need a SECOND OPINION, do not hesitate to continue reading …