Tax and commercial due diligence analyses the value and conditions of a specific company, through the collection and analysis of assets, management and surrounding information.
Due diligence has a significant role especially if the business is looking to expand via acquisition or investment.
The due diligence process can vary depending on the individual needs of the purchaser, and is structured according to the business subject to investigation (for example, it can refer to the same real estate business) and involves several areas of intervention. Legal and technical aspects are analysed as well as economic and financial assessments.
Entrusting the task of due diligence to a professional firm, such as Studio Bocca, is a vital step. Having a clear idea of the situation is an important indicator especially for onerous investments.
The due diligence process can obviously vary depending on the business being assessed and also the individual needs of the purchaser, such as the moment of purchase.
Tax and commercial due diligence can first be split into two categories as the analysis can be requested either by the potential buyer or by the vendor.
The moment in which due diligence is executed can be just as variable. Due diligence can be carried out before a purchase, but also after, for example to amend the price paid.
Alongside tax due diligence, which checks the fulfilment of tax duties and the presence of business liability, there is also legal, strategic and property/ accounting analysis. Particular attention is also paid to the strength of the business in the market place with regards to competition.
An accurate and in depth assessment has undisputed benefits. First of all it allows you to quickly and accurately obtain general information regarding the business structure, the number of employees, the type of business carried out, and the performance in recent years.
There is also more detailed information that can be obtained such as analysis of the business plan, cash flow, profitability (after deducting fixed and variable costs) and tax risks.
Such factors, which are the result of rigorous tax and commercial due diligence, are capable of influencing the final decision of acquisition.
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