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Due Diligence

The business must be profitable. It is important to objectively assess its condition and the risks associated with the loss of assets. For this, a due diligence procedure is carried out – an independent test of conscientiousness. This is a complex task, the solution of which will help to get a comprehensive opinion about the object, its financial solvency, market position. The legality of the activity, the state of finances, the possession of intellectual property are checked. Experts in the field of research are involved in the work.

For the first time, the procedure began to be used in the United States at the beginning of the last century. Modern Due Diligence is the collection and analysis of data to assess investment risks. It is carried out in such cases:

  • Business investment, merger or acquisition transactions.
  • Purchase / sale of intellectual property rights.
  • Taxes Optimization and activities of the organization. Helps to identify relevant as well as irrelevant ways of development.
  • Assessing whether a business idea will work for a startup.
  • Search for any violations in the activity.
  • Drawing up a real idea of ​​the business for the current owner.

SION patent law firm offers services for an independent audit. Depending on the goals, we check one area (finance, taxes, the state of intellectual property) or conduct a comprehensive study.

Due Diligence Checklist 

First, goals are worked out, then a strategic and tactical plan is drawn up, a list of specialists involved is determined. The specialists of our company carry out a check according to the following algorithm:

  • Determine the goals of the procedure.
  • Sign an NDA (non-disclosure agreement) with the client.
  • Collect information using company documents.
  • Select methods for performing the verification.
  • Audit directly.
  • Prepare reports, expert opinions, recommendations.

One of the main directions of our due diligence activity is the verification of intangible, intellectual assets. In the course of its implementation, we check registration documents for TM and patents, their validity periods, actual use, and identify unprotected innovations. The task is to achieve a real understanding of how the audited company is doing in the field of intellectual property.

Tax Due Diligence

In the process, all financial / accounting documentation for the required period is studied and analyzed. Most often this is the last 3 years. The objective of the procedure:

  • determine the real financial indicators of the business;
  • display the numbers of credit and receivables;
  • identify their impact on the sustainability of work in the future;
  • determine the compliance of paid taxes with legal requirements;
  • to establish possible tax risks.

In the wake of the audit, we draw up a report, where we write conclusions on current errors in taxation, and recommendations for tax optimization. And also to minimize future risks associated with paying taxes. We involve professional tax consultants who understand theoretical issues of legislation and conduct inspections in practice.

Legal Due Diligence

Due diligence involves checking corporate and legal risks. It is usually required for investment transactions. It involves the study of methods of control and management; completeness, correctness of paperwork. During legal due diligence, the following documentation is checked:

  • entitling;
  • ownership of movable / immovable property, assets;
  • for intellectual property;
  • contracts with counterparties, their legality, implementation;
  • ownership of stakes in other companies;
  • court cases with pending and pending decisions, their potential impact on business stability.

In addition, we consider the risks of bringing the company to responsibility by regulatory and law enforcement agencies, the risks of challenging transactions or rights to property, loss of registration of patents and trademarks. All this our specialists (lawyers, analysts) reflect in the report. We can also offer criteria for determining risks when concluding a transaction.

Financial Due Diligence

In its process, we assess the investment attractiveness of the company, its fair financial value. We also help answer the questions of how accurate the stated information about profitability is, and whether the market position is stable. During a financial audit, we:

  •  analyze the key indicators of financial condition;
  •  check the structure of costs, revenue;
  •  analyze the assets of receivables and payables;
  •  investigate solvency and business activity;
  •  calculate the market value of the business;
  •  working with other issues.

In the report, we describe realistic prospects for business development, potential financial risks, and give recommendations on investment attractiveness. We involve financial analysts, business consultants, and appraisers in our work.

Due Diligence cost

The duration, as well as the cost of the procedure, will depend on many factors:

  • The nature, tasks of the procedure (financial, legal, tax, marketing, complex audit, analysis of intellectual property).
  • The number of stages, analyzed documentation.
  • The number, professionalism of the specialists involved.
  • Other points – for example, the need to analyze competitors.

We involve highly qualified specialists in the task. They carry out checks in accordance with the legislation of Ukraine, UK, USA, China, UAE, EU, CIS. Specialists find risks and hidden reserves for optimization for amounts at least 10 times more than the client pays for due diligence.

In terms of time, the process takes from two weeks. The larger the company, the more assets and documentation it has, so the audit can be delayed. Usually, we can determine in advance the timing of the work of expert groups after getting acquainted with the specifics and size of the business. The dates can be shifted if it is necessary to request documents from government agencies or counterparties.

Due Diligence Agreement

Before starting cooperation, we sign an agreement with the customer or the audited company. We indicate the essential points in it:

  • an agreement on the non-proliferation of confidential data (NDA);
  • conditions of access to documents necessary for work (title, contracts, financial statements, etc.);
  • organizational measures to collect the necessary information;
  • ways, terms of data provision;
  • volume and sections of the report that will be provided to the customer.

We agree on all points before the start of cooperation, we also provide a detailed cost estimate. SION experts specialize in various types of audits and have carried out it successfully dozens of times. To calculate the cost of Due Diligence, please fill out the feedback form and we will contact you or write to us by mail: info@sion.ua.