Corporate due diligence (CDD) is an extensive process undertaken by an acquiring firm in order to thoroughly and completely assess the target company’s business, assets, liabilities and financial performance.
As part of involvement in commercial transactions including large scale merger and acquisition, specialist firms are expected to examine all legal aspects of CDD relating to the acquired company and its business activities.
PROCESS OF CDD
Corporate due diligence process includes an inter disciplinary examination of various fields and sectors of activity. These aspects of examination touch on assets, obligation to suppliers, employee situation and third parties, status of legal proceeding etc.
CDD process varies according to the type of challenge involved. The types of due diligence include but not limited to;
- Administrative due diligence
- Financial due diligence
- Asset due diligence
- Human resource due diligence
- Environmental due diligence
- Taxes due diligence
- Legal due diligence etc.
CORPORATE DUE DILIGENCE SERVICES
The scope of corporate due diligence services is always determined in conjunction with the size and scale of the transaction and the surrounding risks. Our due diligence service focuses on the most critical elements of transactions, including:
- Identifying and quantifying industry and deal-specific risks and opportunities.
- Evaluating quality and reasonableness of historical and projected earnings and cash flows assessing the quality of assets.
- Identifying hidden costs, commitments and contingencies.
- Identifying and quantifying tax exposures.
- Identifying and quantifying liabilities that can be deal-breakers; and
- Highlighting issues likely to affect the purchase price or contract conditions etc.
In conclusion, CDD is very vital in a merger and acquisition transaction and to guarantee the viability of a company in general.