Unnati Rathi RathiUnnati Rathi rathi asked 8 months ago
1 Answers
RaviRavi Staff answered 8 months ago

This is very basic question
Areas in which Due Diligence can take place –
Legal due diligence: This may be required where legal aspects of functioning of the entity are reviewed. For example, the legal aspects of property owned by the entity or compliance with various statutory requirements under various laws.
Commercial/operational due diligence: It is generally performed by the concerned acquire enterprise involving an evaluation from commercial, strategic and operational perspectives.
For example, whether proposed merger would create operational synergies.
Environmental due diligence: It is carried out in order to study the entity’s environment, its flexibility and adaptiveness to the acquirer entity.
Personnel due diligence: It is carried out to ascertain that the entity’s personnel policies are in line or can be changed to suit the requirements of the restructuring.
Financial Due Diligence: It involves analysis of the books of accounts and other information pertaining to financial matters of the entity. It should be performed after completion of commercial due diligence.
Tax Due diligence: It is a separate due diligence exercise but since it is an integral component of the financial status of a company, it is generally included in the financial due diligence. The accountant has to look at the tax effect of the merger or acquisition.
Information systems due diligence: It pertains to all computer systems and related matter of the entity.

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