Due diligence is imperative in any acquisition. The first step of buying any business must be a thorough examination of all critical aspects of the business subject to the transaction. Every aspect of the target’s operations should be subject to due diligence- financial, commercial, tax, human resource, IT, integrity, social, governance and so on. It has the best of the Dubai auditors & its firm and is one of the top auditing firms of UAE. It is highly advisable to take some expert advice before getting into a deal to avoid future impediment and forfeiture. Before committing to any transaction, the buyer should ensure that it knows what it is buying and what obligations it is assuming. To avoid any future complication, the nature and extent of the target company’s contingent liabilities, problematic contracts, litigation risks, intellectual property issues among other things should be gone through in detail.
There are certain most significant legal and business due diligence activities that should be planned to accomplish the sale and to avoid future complications:
- Financial matters: All the target company’s historical financial statements and the rationality of the target’s projections of its future performance should be scrutinized.
- Intellectual property: Whatever domestic or foreign patents a company has and what steps were taken to protect them and if the company was involved in any intellectual property litigation.
- Sales: The customer base of the company and customer satisfaction.
- Strategic fitness with the buyer: The buyer is also concerned that to which extent the company will fit strategically within the large buyer organization and not just about the future performance of the target company.
- Litigation: The overview of any pending, threatened or settled litigation, arbitration, or regulatory proceedings involving the target company is overtaken
- Material contracts: This is one of the most critical and time-consuming components of the process.
- Management issues: The buyer will want a review of the target company’s management and employee base. He would like to know about any labour disputes and the employment manuals and policies
- Governmental regulations, firing, and compliance with the law: It is important to understand the extent to which a company complies with regulatory requirements.
- Marketing arrangements: As part of diligence, the buyer will want to know the target company’s marketing strategies and arrangement.
- Online data room: The establishment and maintenance of a well-organized online data room is critically important for the success of the due diligence investigation.
Many experienced and independent consultants offer these services and uses established methods of business valuation to achieve highly accurate results of due diligence.