Due Diligence
Due diligence is an analysis and risk assessment of an impending business transaction. It is the
careful and methodological investigation of a business or persons, or the performance of an act
with a certain standard of care to ensure that information is accurate and to uncover information
that may affect the outcome of the transaction. It is basically a "background check" to make sure
that the parties to the transaction have the required information they need, to proceed with the
transaction.
Types of Due Diligence:
- Business Due Diligence
- Legal Due Diligence (including Secretarial due diligence)
- Financial Due Diligence (including Tax due diligence).
Works in the ambit of scrutiny of due diligence
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Compliance with applicable laws
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Regulatory violations or disciplinary actions
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Litigation and assessment of the feasibility of pursuing litigation
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Financial statements
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Assets – real and intellectual property, brand value etc.
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Unpaid tax liens and/or judgments
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Past business failures and consequential debt
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Exaggerated credentials/Fraudulent claims
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Misrepresentations or character issues
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Reputation, goodwill and other intangible assets