How to Perform Due Diligence
Due diligence is a kind of research as well as an analysis that certain companies and business establishments perform in order to prepare for an upcoming business transaction.
More specifically, performing due diligence is the investigation and evaluation of certain business opportunities that arise during the operation of the company. It is exercising excellent care when there are transactions.
In performing due diligence, the proper use of common sense is required. It is very essential in order for your business transaction to be a success. If you have one of the rare talents of foresight, utilize it to its maximum capability. Common sense coupled with a good foresight will definitely seal your dream deal. In addition to that, here are some tips on how to perform due diligence properly.
Parties That Should Be Involved
First is to determine the selected parties who will perform due diligence. In this case, you might want to consider the nature as well as the type of the business that you own. Aside from that, the things that you must also take into consideration are the business opportunity that arose and the staff organization. Also include in this task the lead investors, legal stuff, the staff on corporate or business development, loan officers, financial staff, and investment bankers. Know those positions which already have obligations in performing due diligence individually.
Create your Checklist
Make a checklist which will include all your needed information. Think about the materials and the data that are necessary in evaluating the status and conditions of potential investment. Place all your acquired data in your checklist so as to not overlook or forget anything. If the target or the partner company management provides any necessary information, then try suggesting it. Ask if they can give you company information with regards to their activities, performance, products, results, and accomplishments.
Conduct a Thorough Research
The next thing for you to do is to review the business plans, financial statements, and any other document that you deem is related to have a successful exercise of due diligence. You might want to conduct interviews or visit some sites in order to widen up your scope. You can also add to your task collecting validations of third parties concerning the partner or target company starting from donors, funders, stakeholders, and field experts whether they are local or international. Remember that you can do validations if you deem it important and advantageous with your performance of due diligence. Then, do some research through external sources such as clients, suppliers, and customers. And lastly, select project samples randomly. Evaluate each of these selections for your information. Also add to your evaluation the available data like the previous advertising and marketing campaigns.
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