Due Diligence

Due Diligence in Mergers and Acquisitions is the process of evaluating and investigating a prospective business decision by getting information about the financial, legal, intellectual and other material information from the other party. The ultimate goal of such activities is to make sure that there are no hidden drawbacks or traps associated with the business transaction under consideration. By performing due diligence, a perfect strategy can be evolved to carry out the merger or acquisition.

Mergers and Acquisitions revolve around certain specific steps and due diligence is the first step to make the end business successful. Due diligence helps in understanding the following about the company:

  • Capital structure including shareholding pattern.
  • Composition of board of directors.
  • Shareholders’ agreement or restrictions on the shares, for example, on voting rights or the right to transfer the shares.
  • Level of indebtedness.
  • Whether any of its assets have been offered as security for raising any debt.
  • Any significant contracts executed by it.
  • The status of any statutory approvals, consents or filings with statutory authorities.
  • Employee details.
  • Significant litigation, show cause notices and so on relating to the target and/or its areas of business.M/
  • Intellectual Property of the Company
  • Any other liability, existing or potential.