Due Diligence

Due Diligence (means «ensuring due honesty») is a procedure for forming an objective view of an investment object, which includes investment risks, an independent assessment of the investment object, a full study of the company’s activities, a comprehensive check of the financial condition and position on the market for making certain business decisions. Usually precedes a business purchase, merge, contract signing or cooperation.

Due Diligence is aimed at comprehensive verification of the legality and commercial attractiveness of the proposed transaction or investment project. However, the completeness of information provided by this type of verification also plays an important role, which allows investors or business partners to evaluate carefully all the advantages and disadvantages of cooperation.

Both parties are interested in the objective and competent conduct of Due Diligence: both the investor (buyer) and the party attracting investment (seller).

In the process of conducting Due Diligence, both quantitative indicators and financial data and qualitative indicators are taken into account: assessment of existing management, internal processes and procedures, cost of licenses, location and rights to real estate objects.

The duration of the Due Diligence procedure takes from three days to four weeks (depending on the structure and size of the business).


Grounds for Due Diligence

purchase/sale of the company;
assessment of the investment attractiveness of the company;
public offering of securities in the stock market;
M&A/takeover and merger;
formation of a joint venture;
commercial lending;
verification of the partner/counterparty for reliability.


How can Due Diligence help?

Due Diligence results help avoid or minimize various business risks (economic, legal, tax, marketing), in particular:

purchase at an overvalued company/equity stake;
non-fulfillment of obligations by the debtor;
loss of property, cash;
causing harm/loss, including intangible assets;
litigation and their consequences;
seizure of property or use of other interim measures;
recognition of a transaction/operation as invalid;
imposition of foreclosure on property, securities (shares);
tax, administrative, criminal liability;
the emergence of corporate conflicts (acquisition, takeover, litigation);
rights loss to intellectual property (trademark, industrial design, invention, know-how, commercial ideas, business plans, etc.);
illegal actions of competitors (conspiracy with counterparties, initiation of «custom» checks, dumping, lobbying interests, etc.);
loss or non-receipt of permits, licenses, which approve the project, transaction and so on.


How is Due Diligence done?

Conditionally conducting Due Diligence can be divided into the following types of work:

assessment of the value of the stake (value of the property complex, business value);
legal risk assessment of obligations and transactions/operations;
assessment of the accounting system, reliability of financial statements and financial analysis, assessment of tax risks.


What do we offer

HLB Ukraine specialists – auditors, tax experts, appraisers, lawyers – provide services for conducting Due Diligence and perform the task, working closely in a team, coordinating and analyzing data and findings.


What do you get

The report

Contains all inconsistencies of the company’s activities with current legislation, possible financial or legal risks from the acquisition of the object, as well as potential opportunities for further development of promising areas


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