The investor/ partner may request an enterprise to conduct due diligence in several ways, most commonly in the form of financial due diligence, iommercial due diligence. ), Legal due diligence. In addition, a number of other aspects can also be reviewed into specific aspects such as: Tax due diligence, IT system (IT due diligence), intellectual property appraisal (intellectual) property due diligence.
Especially, small and medium enterprises in Vietnam often have problems with legal due diligence issues.
Due diligence consists of 3 main jobs
There are three main aspects to consider when implementing Due diligence: legal, financial and commercial.
Legal due diligence to understand the legal basis of the transaction. For example, to ensure that the intellectual property rights of the target business can be transferred or not and this can be vital in making the deal. The review of the legal aspects also includes assistance in drafting contracts when making the deal, considering the legal nature of loans, ownership of real estate, and labor to assess eligibility. measures and risks encountered after making the deal. Usually, the review of the legal aspects will be done by qualified law firms.
Financial due diligence is focused on verifying the financial information provided as well as evaluating the basic business activities of the target business. Financial reviews include assessments of income, assets, liabilities, cash flows, loans and internal control systems of the target business. Financial reviews are usually performed by qualified auditing companies.
Commercial due diligence focuses on the business environment in which the target business is operating, such as customer and competitor evaluation as well as evaluation of assumptions used in construction. Business plan of the business. In addition, a number of other aspects can also be reviewed into specific aspects such as tax due diligence, information technology system review (IT due diligence), intellectual property review (Intellectual property due diligence).