Due diligence

Due diligence

The Firm conducts due diligence audit and reviews for Foreign and Domestic investors. The acquiring of a business carries with it a number of risks in areas that include: financial, legal & litigation, markets & products, management & work force, strategic and unrecorded liabilities.

The firm provides a detailed and systematic analysis of data from the target company in order to obtain an overall picture of the company in connection with the corporate deal.

Notably, we put an emphasis on identifying and assessing the risks and opportunities while looking at the assets, liabilities, financial position and results of the target company. The Firm compiles a work plan to meet the client goals, expectations and concerns, ensuring a smooth acquisition. The work approach for such goals is a pre agreed plan with client.

Pratapkaran Paul & Co.,(PKP),Chartered Accountants

We support buyers and sellers at all stages of transactions—from bid preparation and submission to negotiation, sign-off and closure. Our Due diligence audit services are:

Financial Due Diligence:

The Financial due diligence has become a common standard for almost any kind of investment or business dealing such as mergers and acquisitions (“M&A”), issuing new stocks, and any other transaction that includes risk and involves the care that a reasonable entity should take before entering into an agreement. Every investment has its own level of risk, and without good research, the investor may be unable to understand that risk correctly.

A systematic process helps to ensure that buyers and others are on the same page at the time of a purchase. This method helps to prevent any entity from unnecessary harm to either party throughout a transaction. Evaluating risk accurately and acquiring the important and correct information needed to analyze another entity is the goal of financial due diligence Our Team in Financial Due diligence they investigate into the financial affairs that have a material impact on the prospects of the target business. The intent is to identify, quantify and substantiate value drivers or value inhibitors of the proposed transaction.

Vendor Due diligence

At an early stage of the disposal process and based on the vendor’s request we prepare a vendor due diligence report with respect to the target company for potential purchasers which includes an independent analysis and evaluation of the financial, commercial, operational and tax relating issues of the business.

The vendor due diligence report constitutes a credible, independent report suitable for both corporate and financial buyers and considers typical purchasers’ concerns, including opportunities as well as risks and focuses on key value drivers. As our work is in progress we provide continuous feedback to the target’s management on issues identified during vendor due diligence process. Our team specializes in providing the client’s management with a clear, comprehensive and unbiased analysis and also supports the vendor in the following ways:

  •  Negotiate the best deal
  •  Allows greater competition
  •  Retain control of the negotiation
  •  Suited to the process where multiple bidders or investors are involved
  •  Meet the timelines
  •  Reduces disruption to business operations
  •  Minimum post-completion and separation issues

Buy-Side Due diligence :

Buy Side Due Diligence is commissioned by a potential buyer of a business. It can therefore take place at various stage of the deal cycle, e.g. during the early phase of an auction process or to complement other due diligence work. It can also be phased in the case of a deal process with multiple rounds. The purpose of a buy-side DD is similar to the VDD - to confirm the attractiveness of an investment. Our Team will assist in the following ways:

  •  Providing valuable insight into the operations of the company
  •  Structuring and valuing the transaction, Negotiating purchase price and purchase agreements
  •  Determining future financing strategies
  •  Identifying operational areas upon which to concentrate after the deal closes
  •  Assist in determining where the value in the company is and where the “black holes” are

Tax Due diligence

Tax is one of the material and unavoidable costs. Hence, tax due diligence plays a significant role in M&A decision making, though tax is normally not the primary consideration in the context of M & A transaction. Conventionally, tax due diligence is carried out to understand the tax profile of the target and to uncover and quantify tax exposures. However, tax due diligence also encompasses identifying any tax upside (potential tax benefits that are not being claimed/envisaged by the target) which may be available with the target. It also assists in identifying and developing a suitable acquisition structure for the deal in question.

In practice, the most common form for tax risk mitigation is through tax warranties and indemnities in the agreement. The buyer needs to be balanced while negotiating for this tax protection to ensure that it does not impact the commerciality of the transaction for the seller.

To summarize Our Team in tax due diligence audit normally carried out the following :

  •  Validate the representation made by the seller at the time of pre-deal negotiations.
  •  Validate the assumptions made by the buyer in valuing the target.
  •  Identify any material tax exposures that may be residing with the target.
  •  Identify any material upsides (potential tax benefits that are not being claimed/envisaged by the targets)
  •  Structure the deal in a tax-efficient manner.