Finance & Corporate Development

Due Diligence

Due diligence is an information-gathering process where every point of data relevant to a decision is independently examined in detail. The purpose of due diligence is to generate an accurate and verified set of information to ensure that decision-makers are not relying on inaccurate and incomplete information provided by outside parties.

In business terms due diligence generally refers to a critical step in a potential merger or acquisition. However, there are a number of alternative reasons to perform corporate due diligence that are just as important, including the generation of bankable reports, background checks on potential partners, tax analysis and more.

Due diligence is a resource-intensive process that must be performed according to strict practises to be effective. Not only must industry best practises be employed in the actual undertaking, but there must be a comprehensive and detailed plan developed for the process to achieve highly specific objectives.

Therefore, having a Consultport consultant at the helm of your due diligence will help your company to reduce the time and cost, as well as ensure its success.

  • Red Flag Report: A red flag report is a deep-dive analysis of the key issues that will make or break an investment case. Red flag reports are ideal as a selective study of the most critical issues involved in a potential deal that will cancel the deal regardless of the strength of other elements involved. Red flag reports are most often used as preliminary due diligence of a large and complex deal or when one or more critical problem areas is suspected to exist.
  • Commercial Due Diligence: Commercial due diligence is aimed at the analysis of a company’s true competitive position using market intelligence. This analysis can take many forms according to industry standard practises, including direct customer interviews, on-site inspections and more. The purpose of commercial due diligence is to generate direct first-hand verification of the information that is commonly presented in financial documents, such as bankable reports.
  • Fairness Opinion: A fairness opinion is the independent review of a third party due diligence to verify the accuracy of its reported information and the appropriateness of its focus. A fairness opinion is most often used to verify the due diligence of a potential partner or outside stakeholder in joint ventures. Having an outside due diligence consultant verify the reports of your potential partners ensures that you are always making joint venture decisions using the best information that is available.
  • Financial Due Diligence: Financial due diligence is a focused effort aimed at examining the financial details of a corporate partner to a potential deal. Due diligence consultants will examine key financial metrics, such as cash flow, quality of earnings, working capital and product profitability. Focused financial due diligence is ideal when the financial details of a potential partner are critical to some aspect of the deal decision-making.
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