The primary goal of due diligence is to comprehensively evaluate the company’s condition, covering all aspects of its operations. This process involves gathering information and then comprehensively analysing the way the entity functions. The historical and current financial results of the enterprise are analysed, with the entire result of the process particularly useful when an investor wants to buy the company – typically, it is the investor who commissions this assessment.
The due diligence procedure allows the investor to verify the accuracy and reliability of the information previously provided by the seller. Thus, due diligence allows to minimize the risk associated with the planned transaction. Risk minimization concerns mainly financial due diligence, i.e., checking the value of the enterprise and determining its debt. as the following areas are scrutinized during this process:
By examining these aspects, the investor can also estimate investment forecasts for the evaluated company. On the other hand, tax due diligence focuses mainly on verifying the correct tax activities of the enterprise, including VAT, personal income tax or property tax. This helps assess potential investment risks related to tax liabilities. Another option for conducting due diligence is to examine the company’s legal aspects, including its legal status, assets, and identification of potential legal issues.
The scope of the due diligence process depends on the nature of the enterprise, its structure and size. Other important factors include the industry in which the company operates, the organizational culture, the number of employees or the way of conducting business. As a result, the due diligence procedure is slightly different in each company. It is crucial not only to carry out the control correctly, but also to tailor actions to a given situation.
It’s important to note that to conduct due diligence properly, it’s essential to engage trusted experts in their respective fields – particularly in finance, legal advisory, accounting, or auditing. In addition to accounting and tax-related support, we also offer professional advice and assistance in carrying out due diligence. We can also help to tailor this process to the specific characteristics of the enterprise to be assessed. Our experts constantly expand their knowledge to provide solutions tailored to the company’s situation and stay abreast of current changes in legal and tax regulations.
