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Table of Contents

When you’re looking to purchase a brand new home or business due diligence is the practice of carefully reviewing the facts prior to making a big purchase or commitment. It allows you to weigh the benefits against the risks and make a financially viable and strategic decision.

Due diligence differs based on the type of transaction, but there are certain steps that must be taken in each case:

Commercial Due Diligence

This includes a look at business operations, such as customer relations and sales strategies, as well as growth prospects. The goal is to know the target company’s market position and financial strength, allowing for accurate valuation and ensuring that the deal will be beneficial to all parties.

Tax Due Diligence

This section examines the tax structure of the target company, with a particular focus on taxes that are not check this site out income-based, such as sales and usage as well as payroll, property and transfer taxes. It also analyzes the impact of tax-related issues that may arise during the acquisition, and how to structure it and how to minimize the potential liability.

Representations and Warranties

Before a company’s IPO attorneys, underwriters as well as the company itself conduct due diligence to ensure that the claims made in its filings with the SEC are true. As part of this procedure, the company that is being targeted is questioned by its top employees and its C-suite to discuss everything from creation of products, intellectual property to revenue projections, with an eye towards identifying possible pitfalls that could derail the deal. This isn’t the same as performing due diligence on clients, but it’s an important step to ensure that all information and documents are correct and current prior to the DDQ is issued.