This process involves analyzing financial statements and reports, audit documentation and projections, in order to understand opportunities and risks of a company buyout. Key items such as equity, earnings and cash flows are reviewed. Compliance of applied accounting methods is controlled. Items presenting a significant risk when they are included in asset such as patents, inventories, receivables or provisions are verified.
Conclusions of financial due diligence support purchaser in negotiating acquisition price and defining guarantees.
Buy Side Due diligence can be complemented by a strategic analysis, aimed at estimating target potential and profitability, market positioning, strategy, executive skills, perspectives presented benchmarked with industry performance and business culture compatibility.
This analysis focuses on understanding all risks and opportunities as criteria in final investment decision.