Due diligence

One way to check the company is to have it examined due diligence.

The concept of due diligence, which has been known for a long time in international practice, comes from American law, where it is understood to mean what “due diligence” means in Polish law.

Currently due diligence means

subjecting the company (which is the subject of the sale) to a thorough examination of its commercial, financial, legal and tax conditions before undertaking appropriate negotiations. The course of due diligence is similar to the annual audit of financial statements (i.e. to the well-known “audit”). It usually consists of two stages. In the first of them, the data room, the audited company makes available in a separate room source documents that expand information about the company, e.g. contracts, accounting records, etc. This does not require greater involvement and does not interfere with the company’s current operations. In addition, it allows discretion if necessary. An investor who receives exclusivity has the option of conducting full due diligence. At this stage, all information that was not in the data room is available.

The scope of due diligence may be

You can also perform a value audit by checking where and if the company creates value at all

The results of the due diligence are intended to allow the risk of the transaction to be estimated, both in terms of the specific company and the overall situation in the industry.

The full due diligence should also help prepare a schedule for the acquisition process and integrate the two entities. The results of the analysis are also used to construct the final valuation of a given company.