DUE DILIGENCE
Due Diligence is a comprehensive and systematic process of investigating, analyzing, and validating the financial, legal, operational, and strategic aspects of a business or individual entity. It is typically carried out prior to a merger, acquisition, strategic investment, joint venture, or other significant business transaction. The primary objective of due diligence is to provide an informed, fact-based foundation for decision-making. It helps the investing or acquiring party assess the viability, risk exposure, compliance issues, and valuation accuracy before entering into an agreement.
Purpose and Importance of Due Diligence
- To verify financial and legal disclosures provided by the target entity.
- To identify potential liabilities, non-compliance, or litigation risks.
- To assess the operational efficiency, scalability, and growth prospects.
- To validate the business’s ownership, contracts, intellectual property, tax position, and regulatory compliance.
- To enable stakeholders, including management, investors, and financial institutions, to make informed and confident decisions.
Due diligence helps avoid post-deal surprises, protects the buyer’s interests, and supports proper business valuation and negotiation.
Areas of Practice – Our Due Diligence Services
Our firm has extensive experience in conducting multi-dimensional due diligence exercises for both domestic and international clients. We provide detailed reports and actionable insights to help businesses, investors, private equity firms, venture capitalists, and strategic acquirers make well-informed decisions.
We specialize in the following key areas of due diligence:
Focuses on understanding the commercial viability, market positioning, and operational framework of the business.
- Analysis of products and services offered, their sales trend, and growth forecast.
- Evaluation of pricing strategy, market competitiveness, and profitability.
Review of relationships with key stakeholders: business partners, vendors, customers, employees, bankers, etc.
- Examination of company policies, SOPs (Standard Operating Procedures), and internal documentation workflows.
Assessment of business model sustainability, market risks, and expansion potential.
Involves a detailed review of the entity’s financial records, accounting systems, and reporting compliance.
- Examination of the accuracy and reliability of financial statements, including balance sheets, profit and loss statements, and cash flow reports.
Validation of whether financials are prepared as per applicable financial reporting frameworks such as Ind-AS, IFRS, or GAAP.
- Review of subsidiaries and joint ventures' standalone and consolidated financials.
Identification of debt obligations, working capital structure, and cash flow sustainability
Focuses on identifying current and potential legal risks and liabilities that may affect the business transaction.
- Assessment of compliance with corporate laws, environmental laws, FDI regulations, and local regulations.
- Review of ongoing or potential litigation, arbitration, or regulatory actions.
- Analysis of tax irregularities, pending assessments, and statutory dues.
- Verification of labour law compliance, employment contracts, ESOPs, and HR policies.
- Examination of contractual obligations, key agreements (e.g., vendor contracts, leases, NDAs, MOUs, supply agreements).
- Review of corporate structure, related party transactions, and beneficial ownership details.
Evaluates the technological infrastructure, data integrity, and IT governance framework of the organization.
- Review of technology platforms, enterprise software, and technology vendors.
- Evaluation of data security protocols, cloud infrastructure, and cybersecurity measures.
Verification of back-up mechanisms, disaster recovery, and business continuity plans.
- Assessment of tech scalability and its alignment with business growth plans.
Analyzes the company’s work culture, human resources practices, and external stakeholder reputation.
- Review of employee onboarding and exit processes, training modules, and performance appraisals.
- Conducting employee satisfaction reviews and exit interview analysis.
- Feedback from former employees, if accessible.
- Collection of customer and vendor feedback regarding service quality, trust, and communication.
- Assessment of company’s brand perception, CSR practices, and social impact.