The importance of an efficient due diligence process before M & A
Due diligence, in concept, is a terminology used in the context of corporate acquisitions. It concerns the process of searching information about a company. This analysis seeks to identify some aspects of the area of activity, the possibilities, prospects of the brand, as well as the state of assets and liabilities.
When speaking in the M & A process (Equisitions - Mergers and Acquisitions), the Due Diligence process is indispensable, since it demonstrates details regarding the state of the brand to acquire. It is also here that we can have a clearer idea about the guarantee of the future growth of the screen brand and the actual profitability of the project.
The Due Diligence process and the clarity of information
Through the process of due diligence (due diligence), a potential buyer or investor may further understand about the target company, structure, operations and main commercial relationships. These data evaluate the effectiveness of the strategic business potential of the business, if showing an indispensable step for moments before mergers and acquisitions (M & A).
Some considerations that must be present in the Due Diligence analysis, would be:
- Corporate Structure and General Affairs: It is of vital importance, in the process of diligence prior to merger or acquisition, to study the organization, shareholder agreements, recapitalization or restructuring documents, Social, incorporation documents and more. These data show the nature of the brand, its strength and health;
- Fiscal Situation: Governmental audits, possible pending with the Federal Revenue, National and Foreign Taxes, After Declarations - All this should be put on the test, analyzed and studied before any merger or acquisition, a time they are clear health indicators of a brand;
- intellectual property: The Due Diligence process should also study patents, copyright, trademarks, trade secrets and licenses, as well as licensing agreements;
- assets: both the stock and brand equipment, the technology present in spaces and research and development - all this must be present in the analysis of due diligence, guaranteeing full understanding of the current state of the mark;
- Contracts in force: The Due Diligence process should involve the revision of all the company's contracts and commitments. The audit should understand contracts with customers and suppliers, scheduled schedules, loans taken by the brand, employment contracts, license contracts and so on;
- employees and management: employees and management model are important resources for brands and from the analysis of these factors, one can better understand the value of a company.
- Litigation: It is important to carry out a legal consultation to identify if there is some unresolved legal issue, outstanding disputes, closed, arbitrations and so on. Such questions can be clock pumps for the integrity of the brand.
Audilink by your side in the process of due diligence
After reading this article you certainly understood the importance of the due diligence process. If you want to understand more about it, talk to us a little. Do we offer due diligence service ?? And we can not only explain better how our performance is, how to help you in the process.
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