Your business has successfully passed the next stage on the way to the sale: you managed to find the “right” buyer, conclude a letter of intent with him and now your company will have to go through due diligence. What does this mean and what do you need to be prepared for?
Due Diligence checklist: an effective tool for verifying and protecting a business
Due diligence is an independent legal assessment of the company or expert study of certain areas of the company, as well as an examination of agreements for compliance with applicable law. The main purpose is to check the constituent and internal documentation, the available contractual framework, as well as other documents of the company to determine their compliance with the interests of the owner or enterprise, as well as the rules of applicable law.
Due diligence practice is used by an investor who plans to acquire a company or invest money in it. In the process of executing a major transaction, it is important to have complete information about the real price, as well as the consequences that may occur in the event of a transaction. The information gathered in the future may be used in a share issue or in the process of creating a takeover defense plan.
In the due diligence process, the following operations are carried out:
- Checking the financial component of the enterprise for reliability.
- Monitoring the relevance of the policy that the organization maintains in the course of its activities.
- Study of the competitive advantages.
Virtual Data Room for due diligence
Optimization of due diligence processes is possible through the introduction of virtual technologies. The due diligence involves large volumes of information and therefore you should have appropriately organized a secure data repository to collate the information, upload it fully and accurately to the Data Room https://diliroom.fr/ and respond to any inquiries.
The software is designed to create a unified standardized information space of the enterprise and allows the formation of production and sales plans, requirements for resources and materials, financial management, personnel, sales processes, and interaction with partners.
The transition to a new format of deal processing via Data Room gives the organization several unconditional advantages:
- reducing the time of access to information – electronic document circulation avoids paper movement of documents. Any document can be sent through the means of communication of the electronic document management system;
- simplified access to data – electronic document management systems allow you to access the necessary data through the means of searching and exporting data directly from business systems;
- optimization of document and data storage – a single data store reduces the need to store multiple copies of documents. Means of access and indexing of documents, which use electronic document management systems, allow users to instantly get access to the necessary documents and other information;
- automation of business processes – electronic document management systems implies the implementation of a given document processing process. Based on actions with documents, business applications can be automatically updated, new documents can be created, and communication with internal and external users can be established;
- increasing the safety of documents and information – due to means of access control, it is possible to strictly control the employees’ access to information and documents. The presence of a single database allows archiving and restoring information in a short time.