The Investment Funds in pills. Ninth article.

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Deepening: due diligence

 

This is an activity - carried out by professionals in charge - of timely analysis of the company, useful in our case to provide the investor with all the tools necessary to evaluate the company.

Due diligence generally focuses on the following main aspects:

- Due diligence of the market: the function is to make known in a specific way the market in which the company operates, which is not always aware of the investor. This can confirm or not the data entered in the business plan.

- Financial due diligence. This is a very timely financial analysis, in which to analyze and consider the individual data of recent years, divided by sales, margins, production and fixed costs, performance of the balance sheet, analysis of the budget and business plan, as well as of course analysis of liabilities and related risks

- Legal due diligence: it aims to highlight legal issues, such as ongoing or threatened causes, legal requirements for carrying out the activity, contracts, contracts and labor agreements.

- Tax due diligence: potential liabilities, structuring of the acquisition transaction, identification of future tax benefits, preliminary identification of the tax effects of any disinvestment strategies

- Environmental due diligence: necessary for those productive companies that can impact on the environment. It is necessary to analyze whether or not the company is in line with environmental laws, to check the internal control on the state of pollution, to verify any unresolved environmental problems.

 

This is a very detailed analysis, which may also require several weeks of work, in addition to the competition of more professionals for its implementation.

 

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