The term „Due Diligence“ describes the careful, systematic and detailed investigation, examination and analysis of the data of an investment, take-over or merger candidate or the disclosure of information by the target object itself.
Due Diligence extends far beyond the formal audit of, for example, the annual financial statements or the trading books.
In Financial Due Diligence our support would typically include the following activities: Analysis of the financial situation
- Valuation of important accounting documents in terms of assessment changes and accounting changes
- Examination of contracts concluded with customers, suppliers and employees with a view to their effect on the assets, finances and revenue of the target company
- Derivation of purchase price relevant results e.g. EBITDA or EBIT
- Analysis of the sales revenues and margins according to company sectors
- Examination of existing financial forecasts and establishment of alternatives
- Audit of the mathematical accuracy of the integrated planning
Further services related to Due Diligence:
- Determination of possible deal breakers
- Analysis of the company to identify important value drivers and the decisive success and risk factors
- Advice on the form of the deal (acquisition structuring)
- Valuation of the target
- Support in the establishment and negotiation of the purchase price
In addition to Financial Due Diligence is Tax Due Diligence of great significance in relation to the acquisition of a company.