Due diligence is the act of vetting a company prior to signing business agreements with vendors, a third party or https://datahotelroom.info/document-mastery-unraveling-the-magic-of-virtual-management-tools/ client. It’s also a foundational element of good governance, calling for individuals and groups to behave with the same care and attention as a reasonable person in similar circumstances.
It was once a given that when a company’s board of directors conducted due diligence, it involved an entire team of auditors physically going to the office and going through file after file of financial records and documents. There are instances where this is required, however the majority of companies conduct their due diligence using a virtual dataroom (VDR).
The primary kinds of information that are requested during due diligence include:
A complete financial history, which includes audits in the past, tax records and any financial evaluations from external sources. This will include profit and loss, cash flow forecasts, balance sheets, and much more.
Information about the products and service the company provides, including any R&D projects that are ongoing. This could include a listing of any patents, trademarks and other intellectual property.
Buyers also want to know a company’s competitive advantage which can include information such as their customer base sales pipeline market reach, and so on. This can be done by analyzing the information a company has on these factors, and by speaking with existing customers.
As a seller, it is your responsibility to be willing and able to provide the information requested by a prospective buyer. However it’s not a case of just giving everything away, because it’s important to protect your intellectual property. It’s crucial to control access to ensure that only your most serious partners have access to your most sensitive information.