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Due diligence
Due diligence: analysis and evaluation for secure investments
Due Diligence is defined as the process of investigation and information gathering carried out by the potential buyer or investor of a company, after initiating the first negotiations, to determine the real risks of the company and toanalyze the reality of its economic and financialsituation .
The purpose of this process is to minimize the risk involved in a transaction by performing a detailed and independent analysis of the different business areas of the firm. In order to proceed with this, the seller’s express consent must be obtained and it must be carried out in the shortest possible time and without interrupting the business activity of the company in question.
Aspects to review in a Due diligence
Naturally, our goal is to adapt to your needs by providing the maximum added value, so the specific scope of each due diligence will be defined prior to the start of the work. However, in both a buy-side and sell-side due diligence, Capital Auditors has specialized professionals to review the risks, contingencies and key aspects of the target company from multiple points of view:
Determine whether the asset valuation methods used by the Company are appropriate under the circumstances, and whether the valuations of the most significant items are properly supported.
Assess whether the significant liabilities recorded reasonably reflect the Company’s debts and commitments.
Verify whether provisions and other contingent liabilities have been determined using appropriate estimates and the most probable assumptions, and investigate the existence of any material obligations or commitments not recorded.
Review the reasonableness of the figures used in calculating EBITDA, working capital, or other parameters deemed significant for the transaction, and which may have an impact on the Company’s valuation.
Review the Company’s compliance with its tax obligations.
Investigate the existence, if any, of significant tax contingencies, determining—where possible—their quantification and the likelihood of their occurrence.
Analyse the Company’s legal situation from a corporate and contractual perspective, reporting on the legal status of its assets and the obligations assumed by the Company.
Review ongoing litigation.
Review whether labour legislation is being properly applied, including Social Security contributions.
Analyse any labour or administrative labour disputes initiated against the Company and still ongoing at the time of the review.
Identify and, where possible, quantify any potential contingencies related to labour law compliance.
