Due Diligence

The various types of Due Diligence service include:

•  Business Due diligence 

Due Diligence is critical in transactions when two companies plan to merge or when one intends to acquire another to understand if the deal will be beneficial or not. In this process, our expert professionals gather information about the target company, its customers, technology used, assets and liabilities, suppliers, financials, and intellectual property. 

This information enables both the companies involved in the transaction to adjust their expectations from the business restructuring. It helps in risk identification, the definition of a clear structure, and better reputation management. 

• Legal Due Diligence 

There are many legal risks in a business restructuring transaction, and hence a profound analysis into it facilitates the study of the transaction. Therefore, we conduct a comprehensive assessment of assets, securities, existing agreements, taxes, intellectual property, contracts, and many more. Furthermore, we have the legal experts required to draft the transaction contracts and agreements, taking into consideration the legal aspects and the business angle of the transaction. 

Our legal experts also get involved in the negotiation process on behalf of the clients. It helps to avoid any kind of possible legal pitfalls that may diminish the value of the transaction. A thorough analysis of the legal risks and potential solutions for these risks enables the KMS team to draft a legitimate agreement with the least threats possible. KMS aims to determine all the liabilities, manage the risks, and negotiate the optimum cost-benefit for the advantage of the client company. 

• Financial Due Diligence 

Financial due Diligence, we conduct an in-depth study of the present and historical financial statements, accounts, and the relevant compliances to identify the potential risk areas. Such an investigation leads to the identification of the key revenue items, cost items, non-performing segments, assets and liabilities, non-core assets, hidden or contingent liabilities, and similar other data-related trends. 

The risk of taxes may also influence any financial transaction of the businesses. Hence, financial due Diligence also includes an analysis from the tax perspective. It answers questions such as – Are all the tax payment deadlines followed? Is there any trend of unpredictability in profits? Are there any liabilities that may harm the business in the years to come? Are the assets valued correctly? Is there any additional direct or indirect tax applicable to the transaction? 

• Pre-Vendor Diligence 

Before entering into an agreement with the vendors, businesses need to check whether the vendor has the financial capability, operational competence, and a sound system of corporate governance. This is required for any company to decide whether to enter into an agreement with them or not so that the risk to reputation and compliance is minimized. 

Besides, it is also critical to analyze the business relationship that the company has with its vendors to identify the compatibility of both the companies. Such due Diligence also enables the company to identify any changes at the vendor’s end and the impact it may have on the relationship so that a better deal can be arranged for.