VDRs: a strategic tool in modern corporate deal-making

If it’s buying a brand new car, a home or an entire company the majority of people want to be aware of the good and negative aspects of whatever they’re spending their time, money or effort on. They want to make sure they’re making the best decision and won’t be surprised by unexpected surprises later. Due diligence is a procedure of examining the investment or purchase to determine the risk.

There are several different types of due diligence, such as environmental, financial, legal commercial and intellectual property. The areas examined depend on the type of due diligence, but also include licenses, contracts and loans as well as employment issues, property, and regulatory concerns and any litigation pending.

Financial due diligence is the process of verifying and assessing the underlying financial information of a company, such as earnings and profits, assets, liabilities, cash flow and debt. It also involves analysing ratios and utilizing various financial tools to evaluate a company and make projections of future performance.

Commercial due diligence examines the company’s marketplace and competition. It can help determine whether a business is profitable in the long run. It can also reveal potential synergies and opportunities with a potential merger or acquisition.