Due Diligence
The concept of Due Diligence originates from the Anglo-American law and means "due care."
With due or appropriate care, the fortunes and risks of the target company in business transactions during the ongoing contractual negotiations are examined systematically and professionally.
The purpose of the precise analysis is to determine to which extent the determined company value is to be increased or decreased, taking into consideration the strategic target perspectives, liability and guarantee risks, or cost-reducing synergies. With due care, it hereby means:
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to collect all information relevant to decision making, |
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to recognize strengths and weaknesses as well as opportunities and threats of the transaction, |
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to disclose and document liability and warranty risks for purposes of proof, |
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to fix the status quo of the company as a proposed purchase item. |
Examination and documentation subjects are therefore:
| 1. |
Basic data of the company (commercial registry data, company history, etc.) |
| 2. |
Strategic situation (comprehensive strategy, business politics, etc.) |
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External framework conditions (legal, political, socio-demographic and macro-economic environment) |
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Financial situation (balance sheet, profit and loss statement, accounting records, annual accounts, liquidity) |
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Organisational and technological situation |
| 6. |
Sales and competitive situation |
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Personnel policy situation (management, employees, etc.) |
| 8. |
Legal and tax situation |
| 9. |
Environmental and site contamination |
For an in-depth analysis, there are detailed checklists for each point. The collection of data for the due diligence procedure is usually a very concentrated process for which frequently only a few participants are allowed.
The task of the seller is to provide a data room with all documents. With strict personal secrecy, the data may be determined in mostly chronologically purported parameters through nominally determined representatives of the buyer.
M & A Strategie GmbH attends to you in this important process. According to the scale of commission we will coordinate the strict proceedings and take part in the data collection of points 1 to 7. Moreover, we will arrange for any other necessary experts and integrate them in the comprehensive process.
The results of the due diligence procedure are not to be underestimated. They serve to give the partners taking part in the transaction a congruent picture of a complex transactional object. The results are of great importance for the concluding formation of the transactional contract (sales and purchase agreement).
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