{"id":3,"date":"2014-12-27T15:24:33","date_gmt":"2014-12-27T15:24:33","guid":{"rendered":"https:\/\/www.tofler.in\/blog\/?p=3"},"modified":"2018-05-15T05:52:11","modified_gmt":"2018-05-15T05:52:11","slug":"approaches-to-conduct-due-diligence-process","status":"publish","type":"post","link":"https:\/\/www.tofler.in\/blog\/approaches-to-conduct-due-diligence-process\/","title":{"rendered":"Due Diligence: Does it always have to be detailed?"},"content":{"rendered":"<p>Generally, the term &#8216;Due Diligence&#8217; gives an impression of detailed and cumbersome research process. However, that is not completely true. A Due Diligence process\u00a0may range from a high level review\u00a0to detailed and comprehensive research.<\/p>\n<p><strong>What&#8217;s a\u00a0&#8216;High Level Review&#8217; &#8211; <\/strong>As opposed\u00a0to what its\u00a0name suggests, a High Level Review is a quick and summarised review. It\u00a0is generally conducted where the commitment and stakes involved in a transaction are not substantial\u00a0for the companies\u00a0concerned.<\/p>\n<p>A High Level Review may involve\u00a0review of important documents, interview with the management of the company, interacting with employees of several departments, etc.\u00a0<a title=\"Company reports\" href=\"https:\/\/www.tofler.in\/services#reports\" target=\"_blank\">Tofler&#8217;s Company reports<\/a> can also help you perform quick due diligence on any company in India by giving you\u00a0information on its financials, directors, loans taken from banks, auditors and more.<\/p>\n<p>However, sometimes, a high level review could be part of a bigger strategy; the bigger strategy being conducting Due Diligence in a phased manner.<\/p>\n<p><strong>What we mean by conducting Due Diligence in a phased manner.<\/strong><\/p>\n<p>Mergers, acquisitions, takeovers, investments, etc are events that call for\u00a0detailed and comprehensive research into the target&#8217;s\u00a0business because the stakes and commitment involved are substantial. However, plunging directly into\u00a0a detailed Due Diligence process can make the team feel lost in a sea of information. Not to mention the fact that the costs involved also shoot up. In such cases, the Due Diligence should be carried out in a phased manner.<\/p>\n<p><strong>Phase 1<\/strong> &#8211; During this\u00a0phase, a High Level Review of several\u00a0aspects of the company viz legal, financial, operational, taxation etc. is carried out. Next, on the basis of results of this quick review, the areas that need detailed research are\u00a0ascertained. Generally, the following areas are selected\u00a0for a detailed research:<\/p>\n<ul>\n<li>Important areas &#8211; areas important with respect to the transaction in question<\/li>\n<li>Problem areas &#8211; areas where discrepancies were spotted during high level review<\/li>\n<li>Vulnerable areas &#8211; areas where the management\u00a0lacks strong controls<\/li>\n<\/ul>\n<p><strong>Phase 2<\/strong> &#8211; A detailed research is undertaken into the selected areas.<\/p>\n<p><strong>Phase 3<\/strong> &#8211; A deeper investigation is carried out into the problems identified to ascertain its impact and potential future impact on the target business and the transaction in question.<\/p>\n<p>If need be, these phases can be further broken into small processes or consolidated into one process.<\/p>\n<p><strong>Therefore, <em>Due Diligence<\/em> only means <em>Reasonable Care<\/em>. The extent of &#8216;reasonable&#8217; depends on complexity, size and nature of the transaction and how substantial it is for the companies\u00a0involved.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Generally, the term &#8216;Due Diligence&#8217; gives an impression of detailed and cumbersome research process. However, that is not completely true. A Due Diligence process\u00a0may range from a high level review\u00a0to detailed and comprehensive research. What&#8217;s a\u00a0&#8216;High Level Review&#8217; &#8211; As opposed\u00a0to what its\u00a0name suggests, a High Level Review is a quick and summarised review. It\u00a0is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1062,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-3","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-indian-companies-best-practices"],"_links":{"self":[{"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/posts\/3","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/comments?post=3"}],"version-history":[{"count":3,"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/posts\/3\/revisions"}],"predecessor-version":[{"id":37,"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/posts\/3\/revisions\/37"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/media\/1062"}],"wp:attachment":[{"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/media?parent=3"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/categories?post=3"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tofler.in\/blog\/wp-json\/wp\/v2\/tags?post=3"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}