Due diligence

Due diligence is an American legal concept used in connection with the analysis and appraisal of a company prior to a planned purchase or sale. As part of this process, the target company’s commercial, legal, fiscal and financial situation is checked. The objective of a due diligence is to create a basis for decision-making on the purchase/sale of the company concerned, as well as in determining the purchase/sale price, by analysing the risks and opportunities.

Our services

We proceed as follows with the aim of providing the purchaser/seller with comprehensive and reliable information on the target company:

1. An examination of the target company’s structure and legal and commercial environment is conducted in order to identify areas of weakness and grave risks inimical to the purchase or sale of the company concerned. Possible areas of weakness may result from the business, such as for example, the client structure or the quality of management. In addition, there are possible fiscal or legal risks that should be considered in the decision to purchase or to sell.
2. The income and cash flows generated in the past are analysed, also from the point of view of the effects of making use of valuation and accounting options. A normalised and recurring result is established on this basis. We also present a comprehensive picture of the company’s commercial situation in order that the purchaser/seller obtains an overview of the target company’s commercial and financial condition.
3. The plausibility of the assumptions regarding the company’s future development on which the business plans are based is examined and alternative calculations are made in order to assess the consequences of variances of actual development from the plan values.
4. Based on the normalised, recurring result and the assumptions of future development, a sustainable future return is calculated that serves as the basis for calculating the size of the purchase/sale price.

Due to the comprehensive information obtained on the company’s situation, the results of our investigations offer the entrepreneur a sound basis for a decision on carrying out a purchase/sale as well as in calculating the target company’s purchase or selling price.

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