Due Diligence

Due Diligence

Due Diligence is a comprehensive and systematic review of the financial, legal, operational, and commercial aspects of a business to evaluate its true condition, risks, and future potential. It is an essential process in mergers, acquisitions, investments, funding, partnerships, restructuring, or major business transactions.

The purpose of Due Diligence is to verify all critical information provided by the target entity, identify hidden liabilities, assess compliance status, measure financial health, validate operational efficiency, and ensure that the decision-maker is fully aware of the associated risks and opportunities before entering any transaction.

Our Due Diligence services provide investors, buyers, lenders, and business owners with trusted, factual, and actionable insights to make informed and confident decisions.

Scope of Due Diligence

Our Due Diligence covers all essential areas of investigation required to understand the complete picture of a business. The scope includes:

1. Financial Due Diligence

• Examination of financial statements, ledgers, and accounting records.

• Review of revenue recognition, expense booking, and profit margins.

• Verification of assets, liabilities, provisions, and contingencies.

• Analysis of working capital, cash flow, and fund flow.

• Review of related party transactions and inter-company balances.

• Assessment of financial projections, assumptions, and sustainability.

2. Tax Due Diligence

• Review of direct and indirect tax compliances (Income Tax, GST, TDS/TCS, etc.).

• Examination of past assessments, notices, appeals, and litigations.

• Evaluation of tax exposures, hidden liabilities, and disallowances.

• Verification of tax positions, carry-forward losses, MAT credits, etc.

3. Legal Due Diligence

• Verification of business registrations, licenses, and statutory approvals.

• Review of contracts, agreements, leases, MoUs, and legal obligations.

• Examination of shareholding pattern, corporate filings, and ROC records.

• Identification of legal disputes, liabilities, and compliance gaps.

• Checking IP assets: trademarks, copyrights, patents, licenses.

4. Operational Due Diligence

• Evaluation of business processes, production efficiency, and workflow.

• Review of procurement, inventory, supply chain, logistics, and quality controls.

• Assessment of manpower structure, HR policies, and labor compliance.

• Verification of operational KPIs, productivity ratios, and bottlenecks.

5. Commercial / Business Due Diligence

• Understanding the business model, revenue streams, and cost structure.

• Market analysis, industry benchmarking, and competitive positioning.

• Review of customer base, vendor relationships, credit terms, and contracts.

• Assessment of growth potential, scalability, and market sustainability.

6. Compliance Due Diligence

• Verification of adherence to statutory laws and regulatory frameworks.

• Review of company policies, governance practices, and risk controls.

• Identification of non-compliance areas and penalties exposure.

7. HR & Labour Due Diligence

• Analysis of employee contracts, payroll structure, and benefits.

• Verification of PF, ESI, gratuity, leave encashment, and related liabilities.

• Review of HR disputes, employee turnover, skill gaps, and morale issues.

8. IT & Systems Due Diligence

• Evaluation of ERP systems, software licenses, and IT controls.

• Review of data security, access controls, and cybersecurity readiness.

• Assessment of technology reliability and automation level.

9. Environmental & Safety Due Diligence

• Verification of pollution control norms, environmental clearances, and compliance.

• Review of workplace safety, fire norms, and hazard risk management.

10. Final Reporting & Risk Assessment

• Detailed due diligence report covering findings, risks, red flags, and liabilities.

• Clear observations on financial, legal, operational, and business viability.

• Valuation impact and negotiation pointers (where required).

• Recommendations for risk mitigation and restructuring.