DUE DILIGENCE
(1) This term is used is relation to corporate restructuring.
(2) Corporate restructuring includes internal reconstruction, amalgamations, mergers, joint ventures etc.
(3) Corporate restructuring involving more than one party should be planned properly.
(4) Thus, due diligence review is performed to check whether it is feasible and desirable to acquire / merge the unit.
(5) Discipline-wise it can be classified as follows:
(a) Commercial /operation Due Diligence : i.e. to check whether the target is commercially feasible.
(b) Financial Due Diligence : To check the financial feasibility of the target by examining the financial statement and devising their profit trends.
(c) Tax Due Diligence (Direct and Indirect) : Whether the target is paying appropriate taxes on a regular basis. Moreover, ascertain what are the tax benefits available to target.
(d) Information system Due Diligence : Whether information system of target is providing right information to the right management at the right time in the right quantity.
(e) Legal Due Diligence : Whether the target is complying with all the applicable laws and regulations.
(f) Environmental Due Diligence : To check the compliance of target with environmentally related rules and regulations.
(g) Personnel Due Diligence : To ascertain whether the employees of target company are efficient.
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