DueDiligenceAssurance

There is no single law that compels every buyer or investor to commission due diligence, but most banks, investors and free zone authorities expect it before approving a transaction, and it is standard commercial practice to protect both sides. Whether it is required for you generally turns on the transaction structure, the parties involved and any conditions set by financiers or regulators.

Due diligence work is quoted after a proposal, since the fee depends on the size of the target company, the number of entities involved, the scope requested and how much financial, legal and operational review is needed. Once the transaction details are known, a firm can give a fixed quote covering the checklist agreed with you.

Timing depends on the size of the target business, the quality of its records and how many areas are covered, spanning financial, legal, operational and risk review. A straightforward review of a small company with organised records is quicker than one involving multiple entities, incomplete records or cross border operations.

Due diligence is typically carried out before mergers, acquisitions, share purchases, joint ventures and significant investments, wherever one party needs an independent check on the target before committing funds. It applies whenever the buyer, investor or lender wants assurance on the financial position, legal standing and operational health of the other party.

You will generally need to provide financial statements, management accounts, contracts, licences, corporate documents, tax filings and records of any litigation or disputes, depending on the scope agreed. The exact list is tailored to the transaction and is confirmed once the checklist is set with the reviewing firm.

A due diligence review usually covers financial due diligence to verify accounts and cash flows, a legal and compliance review to check contracts and regulatory standing, operational due diligence to assess processes and systems, and a risk and opportunity analysis to flag issues that could affect the value or viability of the deal. Vigor Accounting and Taxation builds this checklist around the specific transaction.