Buyer due diligence is the process of validating assumptions underlying valuation.
The primary objectives are to identify and to confirm "sources of value" and to mitigate real or potential liability by looking for fatal flaws that reduce value.
Due diligence involves three primary reviews.
1. A strategic/operational/marketing due diligence conducted by senior operatons and marketing managers.
2. A financial due diligence conducted by financial and accounting personnel to ascertain the value of assets and liabilities that are being acquired.
3. A legal due diligence to ensure that there are no hidden legal liabilities to any outside party.
A rigorous due diligence is done based on comprehensive checklists.
The strategic and operational review has focus on th seller's management team, operations as well as marketing and sales strategies. An assessment of customer's viewpoint regarding the company's products and people is an essential component of this review.
The financial review examines the accuracy, timeliness, and completeness of thes seller's financial statements.
Legal due diligence concentrates on corporate records, management and employee issues, material contracts and obligations of the seller, litigations and claims.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment