The purpose of financial due diligence is to mitigate investor risk and explore additional opportunities inherent in a business.
Financial due diligence has become one of our everyday services in the world of mergers and acquisitions (M&A). An investor entrusts an auditor to assess the risks and carry out a financial review of the target company.
Due diligence reveals key risks as well as deal breakers.
The conduct of due diligence (sample):
- Site visit
- Status report
- Discussing identified risks (meeting)
- Drafting a due diligence report
- Finalizing the due diligence report
The result of due diligence is a report
We primarily prepare a so-called ‘red flag’ report on the results of our service. In this report, we draw attention to the risks that need to be addressed during the investment and that may exceed normal business risk. Also, it is a guide for the target company on what areas need to be developed. Oftentimes, this is also one of the investment expectations of the target company to resolve the issues therein. Either before or during the investment.
Venture capital and private equity investment
We most often receive our assignments from venture capital investors, who involve co-investors and private equity investors to mitigate the risks. Investors typically ask the target company for a proposal on who should conduct the service. At best, the target company will propose an auditor with whom the investor has already worked, so there is mutual trust in the auditor.
Startup and experimental development
One of the biggest values of startups is not always reflected properly in the accounts. The accounting and taxation issues of experimental development often cause great concern for even the most experienced tax advisors and auditors, as a significant number of startups either create a business model that is new to the market or the product / service development contains something new. Many times our experience and references in this area are an advantage for both the investor and the target company.
Due diligence + MGI Worldwide M&A Marketplace
We are not limited by national borders. If you want to appear as either a seller or a buyer in a global M&A Marketplace, we can assist you. Check out the options: https://forumma.mgiworld.com/