Due Diligence Report
The due diligence report provides a detailed summary of the checks performed and documents the process involved. The scope of the report can vary depending on the specific requirements of each client or project.
Forms of Due Diligence Check
There are several types of due diligence checks that can be performed, including:
Economic, Technical and Organizational Due Diligence Checks
- Assessing a company’s financial health, technical capabilities, and organizational structure.
- Evaluating the company’s ability to meet its obligations and achieve its goals.
Checks of Managers and Staff
- Reviewing the qualifications, experience, and track records of key personnel involved in the business.
- Ensuring that the management team has the necessary skills and expertise to lead the company.
Legal and Tax Checks
- Examining a company’s legal status, tax compliance, and any outstanding liabilities or debts.
- Verifying that the company is in good standing with relevant regulatory bodies.
Operational Due Diligence (ODD)
- Assessing the risks and potential value of a target object, such as a company or asset.
- Identifying areas for improvement and opportunities for growth.
Market Due Diligence
- Exploring a company’s current and future market position, including its competitive landscape, customer base, and revenue streams.
- Analyzing the company’s ability to adapt to changes in the market and maintain its competitive edge.
Due Diligence Process
The due diligence process typically involves the following steps:
Identification
- Identifying the key information required for the due diligence check.
- Obtaining this information directly from the future partner or via a compliance questionnaire.
Sanctions List Check
- Cross-checking against global sanctions lists, as well as lists of companies and individuals who may pose a risk to the business.
- Verifying that the company is not on any prohibited lists.
Risk Assessment
- Based on the results of the investigations, a risk-based approach is drawn up to identify potential risks and opportunities.
- Prioritizing areas for further investigation and analysis.
Frequently Asked Questions
What is Due Diligence?
Due diligence is the exercise of reasonable care in the course of business. It involves a detailed examination of a company’s financial records, done before becoming involved in a business arrangement with it.
Who Needs a Due Diligence Check?
A due diligence check is needed for all companies and organizations if they engage in company mergers or acquire stakes in other companies, or if they work with business partners, especially in an international context.
Why Do Companies and Organizations Need a Due Diligence Check?
Due diligence helps companies protect their interests, safeguard the value chain, and comply with sanctions and legislation on the prevention of money laundering, bribery, and corruption.
What is Checked in Due Diligence?
A due diligence check assesses both existing and potential business partners and their subcontractors, as well as responsible persons. This includes reviewing head office records, red flags, negative reporting in the international press, sanctions lists, PEP lists, results and balance sheets, assets and liabilities, work processes, qualification of employees, company image, quality control, board members, shareholders, beneficiaries, and more.
Who Helps Companies with the Check?
It is advisable to call on trained staff (in-house employees) or external advisors (tax consultants, auditors, lawyers, technical experts, management consultants) to perform a due diligence check.