Professional Documents
Culture Documents
TMC VARADARAJAN
SUBJECT :- MERGERS, ACQUISITIONS & CORPORATE RESTRUCTURING
Group Members : NOOR GHARE JITENDRA TATKARE VINAY LAD DANISH TAYYAB DABIR RIZWAN KHAN
ROLL NO 26
25
DUE DILIGENCE
3. OPERATIONAL DUE DILIGENCE Operational due diligence includes investigating the targets intellectual property, its production, its sales and marketing efforts, its human resources and the other operational issues. Meaningful generalization of operational due diligence practices are difficult to make as it varies from target to target. Operational due diligence practices can be undertaken by analyzing the information from the following sources: Newspaper and magazine reporting about the target company, Available information with trade associations chambers and regulatory bodies, Company journals, brochures and websites, Market reports, Interviewing the employees, ex-employer etc.
Request access to all of the other company's business and financial records from the past 3 years. Hire a forensic accountant to review these records and give you an analysis of the state of the business prior to deal negotiations.
Conduct a review existing labor and supply contracts the other business has with third parties. Decide whether or not you would like to continue these contracts after the merger, and then ask your attorney to review the contracts to see if this is possible. Request copies of any and all litigation the company has been a party to in the last 5 years. Ask your attorney to review these documents to see if you will be exposed to liability arising from conduct that occurred prior to the merger.
Compile a list of the other party's real estate and personal (corporate) property holdings. Hire a title company to research the titles of all real estate holdings to ensure that ownership can pass to you cleanly after the merger.
Request a complete list of the other company's intellectual property holdings. Intellectual property holdings include patents, copyrights and trademarks. The value of each piece of intellectual property can be a major factor when negotiating the costs of the merger.
Ask for copies of the other company's federal, state and local tax returns for the past 5 fiscal years. Submit these forms to your forensic accountant so that she can provide you with a report on the state of the company's tax liabilities. Request copies of any and all liens, easements, encumbrances or other barriers to the full and unrestricted use of any accounts or property to be handed over after the merger.
CONCLUSION
Due diligence refers to the detailed investigation process by an investor or his associate to assess the strengths and weaknesses of a proposed acquisition by enquiring all the relevant aspects of the past, present and the predictable future prospects of the company to be acquired. The investigation process includes financial, operational and legal due diligence. Hence, by going for proper due diligence, the buyer can assess the target company and accordingly decide whether to go for the deal or not.