Corporate Due Diligence
Have you ever had doubts before signing a business deal with someone? Or you might have thought about their working culture, strategies and their sales?
If you are a company who is about to sign a deal to have a business partnership then you must conduct a corporate due diligence investigation to ensure that you are doing the right thing.
Business world can be a tricky place with frauds and illegal companies trying to snatch your hard-earned money. They look just the same as a regular, legal, valid company but what goes inside is a dark secret which they hide from other people to protect their original identity.
Corporate due diligence is one such investigation which can answer all your questions before you actually get into any kind of deal or contract. Let us discuss some more about what is actually corporate due diligence investigation and how it works.
What is Corporate Due diligence?
A corporate due diligence investigation is conducted before you actually sign a legal contract with some other company. The word “due diligence” means “reasonable care” or “required carefulness”, these kinds of investigations require the utmost privacy and care so that the subject does not discover about the investigation. Also, the contract that businesses usually follow are under a non-disclosure agreement which makes it illegal to discuss it with anyone, let alone an investigation agency.
If the investigation agency conducts a corporate due diligence investigation, it has to be performed with utmost care and security to ensure a smooth conduct of the investigation. All India Detective is the best private detective agency that conducts over a series of investigations on the behalf of a prospective purchaser or an investor in a company or a business.
How can Corporate Due Diligence Help Your Company?
A corporate due diligence investigation can help you in cases of mergers, flotations, acquisitions, stock market exchanges, and investments that you make with another company. We have created a strong base in the corporate world with our experienced professional detectives who have conducted hundreds of corporate investigations over the years.
Conducting a corporate due diligence investigation can help you get details about a company’s assets, liquidity, market value, stock values, turn overs, other financial and managerial information which can help you in making more precise decisions.
We have a complete corporate due diligence checklist which we use during the investigation to make more informed analysis and get proper statistics about the company. Having a due diligence checklist for acquisition helps in determining the loopholes of a particular business.
You might be new in a particular business segment where you require more perspective and clear vision to make the right collaboration. Often, businesses can be lucrative, but their functionality can be a total mess and harm your company in later stages.
A corporate due diligence investigation can help your company in the following ways:
- Examination of a potential target for mergers, acquisition, partnerships and investments.
- An in-depth study about their future prospects and their consequences.
- Their assets including property, market value and net worth of their products/services.
- A compatibility audit which will determine if you are fit to make a partnership with the subject company.
- Informational audit to know more about their strategies, work culture, financial status, any previous debt records, loan records, bankruptcy, allegations, criminal records, etc.
Corporate Due Diligence can help in Corporate Finance Deals
A complete corporate due diligence report can help you track live data about the stocks and market value of a prospect partner company. If you are about to go for a merger or an acquisition, you must know about the financial status of a company in detail, since you will be responsible for most of the decisions once you take an acquisition, you need to be well informed about what you are getting into.
Business meetings and presentations are always conducted in a manipulative, diplomatic and lucrative way to showcase themselves as the best company present in the market.
A corporate due diligence report will provide you insights about their financial details such as:
- What is the company’s annual, quarterly, monthly financial statement from the last 3 years?
- Do they conduct a regular financial audit of their company?
- Is their business growing or degrading in terms of finance?
- What will be the requisite capital to keep the company running in the current state or in advanced state.
Finance deals are usually made between companies on the basis of relevant statistics, market value and reputation. There are several factors about a possible partner company that could affect your business, such as:
- Franchise agreements
- Lease agreements
- Employee management structure
- Investment in products manufacturing/services/ resources
- Insurances covering the company’s assets
- Power of attorney
- Settlement agreements
- Customer and supplier contracts
One needs to look carefully in these aspects, however, it is an in-depth investigation which cannot be conducted without the help of a private detective agency. If you are a company who is merging with a relatively smaller business then having a due diligence checklist for small business at handy is the best way to have a safe investment. For the companies that are well established and reputed, there are additional things you need to focus on, especially their future prospects.
Key Corporate Due Diligence Activities
Due diligence checklist for acquisition and mergers can give you details about the following things:
- Any unusual revenue recognition issues in the company
- If the company has enough financial resources to keep the business running or expand in terms of branches and its services
- Domestic and international patents the company might have
- Common registered trademarks and service marks the company has
- Copyright products and materials used
- If the company is infringing on an intellectual property of a third party organization
- The sales/terms/policies of a company
- Market conversion funnel of their sales
- Revenue enhancements that might occur before or after acquisition
There are hundreds of other things that you can discover by conducting a corporate due diligence investigation before you get involved in a contractual deal.