The term due diligence describes a general duty to exercise care in any transaction. It spans investigation into all relevant aspects of the past, present, and predictable future of the business of a company.
The main purpose behind conducting due diligence usually is
- Confirmation that the business is what it appears to be;
- Identify potential “deal killer” defects in the target and avoid a bad business transaction;
- Gain information that will be useful for valuing assets, defining representations and warranties, and/or negotiating price concessions; and
At S.R.Dinodia & Co., we believe that effective due diligence depends on identifying and managing significant transaction issues, anticipating and identifying potentially important risk and negotiation issues. Our approach is to save time, money and effort as well as to help in influencing the price at the outset of the deal.
A well-run due diligence program can guarantee that a business transaction will be successful. It can improve the odds and eliminate risk to a very large extent thereby ensuring positive results for the company.