Due Diligence is the process by which investors /partners /competitors conduct due diligence and special investigations on enterprises. Through this special review and inspection process, the investor/ partner /competitor will know all the necessary information about the business that they intend to invest or do business with. And based on this Due Diligence result, investors can consider and decide whether to conduct cooperation or invest in the business or not.
What types of Due Diligence are there?
Basically in fact, according to the wishes of the investor, the nature of the transaction as well as the size and complexity of each investment deal, investors can propose many types of Due Diligence.
There are basic types of due diligence:
Legal Due Diligence: Legal evaluation of businesses
Tax & Financial Due Diligence: Tax and financial due diligence of the business
Commercial Due Diligence: Appraisal of the market as well as the startup activities of that market.
Depending on the wishes of the investor, there may be other Due Diligence. For example, they will assess the personnel, labor, environment or even intellectual property rights of the business.
Documents required for the Due Diligence process may include
Business operation certificate of the enterprise.
Paper related to ownership structure
Decisions, minutes and notes of the General Meeting of Shareholders
Licenses, certificates, registration results, protection reports, notices to state agencies or other business conditions that enterprises must meet.
Information about transactions, contracts, agreements in the course of business
Information about disputes, conflicts or conflicts within the enterprise