Due Diligence Checklist for Indian companies

Due Diligence Checklist for Indian companies A famous adage ‘Look before you leap’, perfectly epitomizes the importance of carrying out due diligence services before entering into certain agreement. It is better to investigate beforehand rather than be sorry for matters that were concealed or hidden in the process of agreement.

Here comes the need of hiring a professional and experienced due diligence services in India for investigating matters under agreement for collaboration or partnerships and analysis of data.

Due Diligence is an investigation, audit or review performed to confirm facts of the matter under consideration. It is being conducted by a firm or company by hiring professional service providers to confirm and verify information; that was brought up during the deal or investment process. The main motto behind conducting the due diligence process is to locate potential defects in the deal or investment opportunity and thereby avoid a bad business transaction.

It is the vital process initiated by the companies and private equity firms to evaluate a potential merger or acquisition. Buyers will conduct due diligence on a target company to confirm the efficacy and accuracy of the claim made by the seller, to alleviate risk and get deep in sight into the operations before committing to the deal.

Professional service providers follow a well laid out checklist to conduct the due diligence. The checklist is the compact and organized way to analyze a company; that is being acquired via sales, merger or by any other method.

Key considerations; that are put on the due diligence checklist by the leading a professional due diligence services in India, are: 1.

Corporate structure and general matters: Corporate structure, capitalization, organizational documents and general corporate records of the company is carefully reviewed to ensure that everything is in order. Some of the vital documents that are reviewed include- Corporate bylaws, incorporation documents, organizational chart, stockholder and voting documents, minutes from all board of directors etc.

2.

Taxes: The due diligence services; explore any historical income tax liabilities and provides an analysis and tax carry forwards and their potential benefits. The experts verify whether taxes are current in all jurisdictions and that are no issues pertai ning to tax matters.

3.

Strategic fit: From the point of view of the potential buyer, it is important to explore the extent to which the company will fit strategically within the current business. This will include considering integration and transition, human resources, marginal costs, work culture and alike.

4.

Intellectual property: The service provider for due diligence will establish the extent and quality of the target company’s technology and intellectual property by reviewing patents, copyrights, domain names, trademarks, licenses etc.

5.

Material assets: Material assets of the company are vital in mergers and acquisitions transaction. The due diligence reviews the total value of the assets and any debts or liabilities against them.

6.

Contracts: All the material contracts and commitments of the target company is

one of the most vital aspect of due diligence. Documents including contracts of customer and supplier, partnership agreement, loans and credit agreement, equipment leases, franchising agreements are reviewed.

7.

Employees and management: Employees are vital resource in merger and acquisition. The quality of structure of the company and the employee base is reviewed. The buyers also seek to understand which employees should remain after transaction as well as any issues of the past employees.