What are the type of Due Diligence?

type of due diligence

In our previous article, we have discussed to you what is the correct definition of due diligence. Now, we will be guiding you to the process of identifying the right type of due diligence in a particular transaction. In this manner you can easily determine what kind of due diligence is best suited to your situation.

Whether you are about to ink a deal with a business partner, entering into a new contract with a service provider or a client, or simply doing your investigation before meeting a new business partner. Always be reminded that due diligence is a very important aspect of your transaction. Regardless of your business, legal, or commercial transaction, your due diligence process should not be a hopeless cause.

Let’s go down to business

The following are the three main categories wherein due diligence would normally fall into:

Type of Due Diligence : Legal

The Legal due diligence is conducted in order to ascertain and ensure that a transaction is legal and lawful in all aspects. To shed a light, this is applicable in cases like company or business sale. On a company sale, a legal due diligence is vital in order to ensure that the company is 100% compliant to its tax, fiduciary and legal obligations before purchase is finalized. Also, this process would also ensure that lawful ownership of the company is legally transferrable to its new owners when sale is made. Particularly in matters relating to a proper legal review of its existing or previous legal structure, corporate substance, contracts, loans, mortgages, property, employment and other legal matters.

Type of Due Diligence : Financial

The Financial due diligence focuses heavily on the financial side of the company. An assessment and evaluation will be made extensively to identify all apparent and underlying company and business performance on all its historical data. A review will also be conducted on the sales, earnings, assets, liabilities, cashflow, debt, and management of the company. All these matters are normally included in the due diligence process.

Type of Due Diligence : Commercial

The Commercial due diligence is conducted to uncover a target company’s activity, viability and potential. Thus, it normally includes a methodical analysis on market demand, assessing competitors, customer evaluation, commercial positioning, revenue, sales, and competitive dynamics of a company.

Bottom line

Whether you are looking for a quick fix or permanent solution on your compliance and due diligence problems, Compliancia Limited is always here to assist and provide guidance in your decision making and compliment your in-house or external due diligence process.

We offer direct and straight to the point services such as People Check and Company Check if you want to check a person or a company’s background on a ground-up approach.

Talk to us now and avail of our One Time Free Report on any of our services.


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