Types of Due Diligence
Due diligence is not a word that sets your blood pumping, but it’s a vital business practice when you are selling or buying a business. It involves looking into every aspect of the company to make sure that all parties involved have a clear understanding of what they’re getting into.
The process can last from 30 to 60 days, but it should begin as soon as you can to avoid confusion and legal implications. It is essential that businesses prepare for the process in advance by having a library of documents with all relevant documents and documents. This will help to save time and money during the actual investigation.
Due diligence can come in a variety of forms, depending on the type of business and nature of the transaction. Here are some of the most frequently used types:
Legal Due Diligence
This type of due-diligence investigation focuses on any liabilities that may affect the final outcome of a transaction. It usually involves carefully examining all contracts that are material including licensing agreements and partnership agreements, as well as term sheets and loan and bank financing agreements.
Commercial Due Diligence
This includes analyzing the market position of the company in terms of size and growth as well as competition. This could include interviews with customers, assessing competition and creating a more complete analysis of the company’s strengths and weakness.
This type of due diligence is a thorough examination of all details available about the case at hand, including any evidence against the accused person. It also includes analyzing the evidence for exculpatory purposes that is available. When deciding whether to bring charges against the person, a prosecutor has to make this decision.