Due diligence is a systematic study conducted by professionals before an investment is made or a new strategic partnership is taken up. The process helps to identify potential risks due to past transactions undertaken. Due diligence process helps the investors and the parties to the transactions to take an informed decision based on the facts and figures produced.
A fully focused diligence process covers a 360 degree view of the business transaction covering areas like financial analysis, tax, legal, statutory, enterprise valuation, corporate governance, risks, ethics, internal controls and other key areas.
One single approach of due diligence review will not be appropriate for all the business models. It requires an open mind for business understanding, industry knowledge, understanding the detailed scope of the engagement to offer bespoke advice on a particular transaction. This approach helps in identifying potential risks and exposure to various weaknesses to avoid costly
mistakes in foreseeing risks and mitigating them.