Secure your investments by using a due diligence checklist and correctly assess the value of a company.
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Investors, business owners and consultants use a due diligence check list when analysing a company or organisation they wish to acquire either through purchase, merger or another method. This type of checklist helps to ensure that the final decision is based on a thorough examination of all aspects of the business. It is also used to identify red flags and determine whether the current value of a company is a sound investment.
1. Where frequent red flags occur during due diligence
2. The 3 main types of due diligence checklists
3. A powerful mobile tool for conducting an acquisition due diligence checklist
Investors and consultants must examine key aspects of a company to determine whether the investment is worthwhile. This includes finding red flags that may harm profitability. The following key aspects should not be missing from any due diligence checklist template:
Public perception can affect the profitability of a company. For due diligence, it is important that the due diligence template includes what the media, competitors and the target market have to say about the company.
There are three types of due diligence that can be covered by a checklist, namely 1) legal, 2) financial and 3) commercial. All help to provide the right information to thoroughly evaluate the business, assets, capabilities and financial performance of the company of interest.
The legal due diligence is the examination and revision of legal documents and contracts. This includes in a due diligence checklist the examination of areas such as:
Financial due diligence includes the verification and evaluation of the company's financial documents. In a due diligence checklist it covers areas such as:
Commercial due diligence is the fundamental understanding and investigation of the market in which the target company operates. This includes activities such as discussions with customers, analysis of the business plan and assessment of competitors, that can be all checked with a due diligence checklist.
For due diligence, a large number of company documents must be reviewed in the shortest possible time in order to be able to assess the viability of a company for an investment, merger or takeover. Lumiform, the powerful, mobile auditing application, helps entrepreneurs and consultants conduct effective due diligence by providing the following benefits:
1. Convenient highlighting of results
2. Digital recording
3. Secure information
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