In mergers and acquisitions, one of the most important processes is the due diligence, this process is something which the purchaser conducts to confirm the accurate claims of the seller, which is a potential mergers and acquisitions deal that involves different types of due diligence.
Before you head to the rest of the article, might as well learn the definition of due diligence. It is an investigation or process of taking care of a reasonable business or a person that is expected to take before entering into an agreement or a contract involving another party, it is also an act that has a certain standard or care. In this article, let us discuss the ten different due diligence check hong kong process that is important especially for a business firm in coming up with a thorough assessment of a company’s assets, capabilities, financial performance, and other important aspects.
- Administrative due diligence- this type of due diligence involves in the verification of administration-related items like the occupancy rate, the facilities, and the number of workstations in a company.
- Financial due diligence- One of the very important types of due diligence because it is used in seeking whether the financials that is showcased or displayed in the Confidentiality Information Memorandum (CIM) are proven to be accurate or otherwise.
- Asset Due Diligence- The Asset due diligence is the official report that is usually inclusive of detailed schedules or the fixed assets and its locations as well as the entire agreements for equipment, and the schedule of sales and the purchases of equipment in the past few years.
- Human Resource due diligence- This is the type of due diligence that is extensive and it can include some of the following analysis of the total number of the employees, current positions, vacancies, retirement, and also the current salaries, bonuses and the number of years of service of employees.
- Environmental due diligence- This is related to the regulation of any environmental rules and regulations that the company may have violated according to the investigation done by local authorities which gives them the power to penalize the company or worse shutting it down operationally unless proven innocent.
- Taxes Due Diligence- This is focused on the review of the tax liability of all taxes the company must be paying to ensure that they are not intended to under-reporting on their taxes and conduct a private investigation hong kong.
- Intellectual property due diligence- Each company has its own intellectual property assets that need to be protected from being monetized without their approval or authorization by another company. These intangible assets may be of product or service.
- Legal due diligence- Considered an important type of due diligence because it examines the copy of memorandum and articles of association, meetings of board meetings in the last three years, and other important documentation of a company’s operations.
- Customer due diligence- This includes the close monitoring at the target company’s customer base by examining different statistics and information of the customer base of a company.
- Strategic fit due diligence- The acquirers are exercising due diligence regarding the evaluation on how to target company that fits with its overall strategic business plan which is directed towards the buyers.