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Due diligence services and why they are critical in a merger/acquisition situation


Mergers and acquisitions cannot proceed when the buying firm has not done due diligence on the firm it is acquiring or buying.


Why do you need to hire the services of due diligence companies in India when you’re contemplating a transaction?


Read on to know more –


What is due diligence?


The range of investigations and audits carried out on a firm that is about to be acquired or merged with another firm is collectively known as due diligence. Due diligence is usually a mix of financial, tax and legal checks.


Why is due diligence important?


When you seek help from a company that offers due diligence services India during a merger or an acquisition, you will be able to –


    . Gauge whether the details shared by the company you are about to acquire or merge with your venture are genuine or not.


    • You will be able to shield your business from unexpected financial or legal problems that entail the company you are about to acquire or merge with your venture.


    Why hire an external expert for due diligence services?


    There are plenty of benefits when you hire a company that offers due diligence services in Mumbai or in any other city for that matter.


    Some of those benefits are mentioned below –


      . You will be able to gain insights into the accounting, tax and finances of the firm you are about to acquire or merge with your business.


      • You will be able to ensure that you are aware of all the potential liabilities of the business which may not be fully accounted for or recognised by the current management of the business


      • You will be able to gain insights into the commercial significance of the firm you are about to acquire or merge with your business. In case you are unfamiliar with the sector, third-party due diligence services will allow you to make informed business-critical decisions.


      • You will be able to ensure that the deal is structured in the most efficient manner possible especially from the tax and accounting perspective.


      What are the issues with not getting external due diligence done?


      There are several issues when one doesn’t get external due diligence done. Some of those issues are as follows -


        . You can get penalized or your company can be held liable financially if you fail to consult with a due diligence service provider while merging or acquiring a new firm with your business. The explanation goes like this – if the target company had past non-compliances with the legal system or the financial system of India then its liabilities will fall on your shoulder!


        • Without a due diligence service provider overseeing the merger or acquisition process, you and your company can face litigation proceedings in the future as you will be overlooking existing ligation proceedings by and against the target company.


        Conclusion


        If you need due diligence services for an upcoming acquisition or merger then make sure that you consult with a reputed firm that has experience in this area. To know more about our Transaction Advisory Services, please visit: Transaction Advisory Services