Due Diligence Report

inding skeletons in the closet before the deal is better than finding them later” is a relatable aspect when it comes to due diligence. The information collected during this process is crucial for decision making and hence needs to be reported. The Due Diligence report helps one understand how the company plans to generate additional earnings (monetary as well as non-monetary). It serves as a ready reckoner for understanding the state of affairs at the time of purchase/sale, etc. The ultimate purpose is to get a clear picture of how the business will perform in the future.

Types of Due Diligence

1. Business Due Diligence:	It involves looking into the parties involved in the transaction, prospects of the business and the quality of investment.
2. Legal Due Diligence:	It mainly focuses on the legal aspects of a transaction, legal pitfalls and other law related issues. It covers both inter-corporate transactions as well as intra-corporate transactions. Various regulatory checklists form a part of this diligence along with the already existing documentation.
3. Financial Due Diligence:	Financial, operational and commercial assumptions are validated here. This provides a huge sigh of relief to the acquiring company. Review of accounting policies, audit practices, tax compliances and internal controls are done in detail here.

Documents Required