The concept of Due Diligence originates from the Anglo-American law and means "due care." This means the proper and intensive investigation of the company for sale by the purchaser.
With due or appropriate care, the opportunities and risks of the target company in business transactions during the ongoing contractual negotiations are examined systematically and professionally.
The purpose of the precise analysis is to determine to which extent the determined company value is to be increased or decreased, taking into consideration the strategic target perspectives, liability and guarantee risks, or cost-reducing synergies.
With due care, it hereby means:
to collect all information relevant to decision making,
to recognize strengths and weaknesses as well as opportunities and threats of the transaction,
to disclose and document liability and warranty risks for purposes of proof,
to fix the status quo of the company as object of purchase.
Examination and documentation subjects are therefore:
Basic data of the company (commercial registry data, company history, etc.)
Strategic situation (comprehensive strategy, business politics, etc.)
External framework conditions (legal, political, socio-demographic and macro-economic environment)
Financial situation (balance sheet, profit and loss statement, accounting records, annual accounts, liquidity)
For an in-depth analysis, there are detailed checklists that are applied company-specific.
The collection of data for the due diligence procedure is usually a very concentrated process for which frequently only a few participants are admitted.
The task of the seller is to provide a data room with all documents. With strict personal secrecy, the data may be determined in mostly chronologically purported parameters through nominally determined representatives of the buyer. M & A Strategie GmbH attends to you in this important process.
As far as we are commissioned we will coordinate the strict proceedings and take part in the data collection of points 1 to 7. Moreover, we will arrange for any other necessary experts and integrate them in the comprehensive process.
Contract and Purchase Price Relevance
The results of the due diligence procedure are not to be underestimated. They serve to give the partners taking part in the transaction a congruent picture of the complex transactional object.
The results are of great importance for the concluding formation of the transactional contract (Sales and Purchase agreement).