Different Types of Due Diligence

Most people are keen to know the pros and cons of anything they invest time, money, or energy on, whether it’s a new car, a home or a complete company. They want to ensure they’re making the best possible decision and won’t be surprised by unpleasant surprises later on. This is why they conduct due diligence, a method that looks at a purchase or investment to determine the risk.

Due diligence can be classified into several types which include commercial, financial, environmental and intellectual property. The areas examined depend on the type of due diligence, but also include licenses, contracts and loans as well as employment issues, property, and regulatory concerns and any pending litigation.

Financial due diligence is the process of verifying and evaluating the financial data behind including earnings and profits, assets and liabilities, cash flow and debt. It can also include analysing ratios and utilizing various financial tools to size up a company and make projections about future performance.

Commercial due diligence is capitalizing on VDR’s remote access feature for agile operations a procedure that examines a company’s market and competition. It can be used to determine if a business will be profitable in the long run. It can also identify synergy opportunities and the benefits of a merger or acquisition.