Due diligence is the careful analysis and evaluation of a purchase object, especially before a company purchase or investment; it is also known as company valuation. The aim of due diligence is to determine the strengths and weaknesses of the company and to determine the risks.
The due diligence examination includes, among other things, the analysis of business documents and questioning of management. It is usually carried out in several phases, depending on how concrete the purchase intentions of the potential buyer become. The purchase price is based on the results of the examination.
The due diligence review includes:
Economic audit, legal audit, audit of contractual relationships, audit of hidden liabilities, audit of existing tax arrears and the tax structuring options for the company purchase, audit of technical equipment, determination of the value of existing patents, assessment of environmental risks, market analyses, staffing.
See also:
Organisation; Ratings; Risk management; Strategic management; Corporate objectives
Reference to QET guidelines:
Q06 Change Management; T01 Guidelines; T02 CI; T15 Benchmarking; T16 SWOT; E01 Business Ethics; E19 Ecology