Due diligence is an investigation of the financial circumstances of a business or individual. Due diligence means “reasonable care”, which means that investors should do their research before investing in a business or joint venture. It is often used before a business is bought or before a business partnership starts. This process helps people make more informed decisions and to take less risks, it can identify costs and benefits, it gives the potential investor an idea of where the business is at currently and where it is projected to be. This helps you make the best possible decision when investing
In financial due diligence, these are some of the areas that are examined.
Revenue and Profit
· Business Debts
· Company Assets (Property, Equipment, Stock etc.)
· Shareholder Value
· Company Policies
· Internal Operations
· Competitor analysis
Looking into these will then let you be able to examine the risk involved and make an informed decision before buying a business or starting a partnership
For further advice on due diligence, please contact Cronin and Co today.