While due diligence may not be a topic that sets the heart racing, being able to understand and evaluate a prospective acquisition, buyer or partner is essential to any growing company in today's challenging business environment.

If you're looking to sell your business, are considering a merger or if you're entering into a contract with a new supplier, doing your homework will give you the knowledge and confidence to get what you want out of the deal. It shouldn’t simply be a rubber-stamping exercise.

Due diligence identifies issues so they can be tackled early on; it can help you establish the true value or cost of a business transaction and the right information can contribute to how the terms of your agreement are drafted. Due diligence should empower you to negotiate the best terms for your firm.

Ultimately, due diligence shouldn't just be focused on compliance – its about having confidence in who you do business with and a better understanding of their business.

Where we can make a difference

Legal Due Diligence

Legal due diligence seeks to examine the legal basis of a transaction, for example to ensure that a target business holds or can exercise the intellectual property rights that are crucial to the future success of the company.

• legal structure
• contracts
• loans
• property
• employment
• pending litigation
• Bank Due Diligence

Financial Due Diligence

Financial due diligence focuses on verifying the financial information provided and to assess the underlying performance of the business. This would be expected to consider areas such as:

• • earnings
• • assets
• • liabilities
• • cash flow
• • debt
• • management

Commercial Due Diligence

Commercial due diligence considers the market in which a business operates, for example involving conversations with customers, an assessment of competitors and a fuller analysis of the assumptions that lie behind the business plan. All of this is intended to determine whether the business plan stands up to the realities of the market.

Others

Other types of due diligence cover areas such as taxation, pensions, IT systems and intellectual property.