- Financial
- Legal
- Fiscal
- Strategic (industrial)
Within the transaction process in company acquisition/investment cases, this buy side due diligence is well-known as the acid test for company valuation/the basis for draft agreements and the negotiation strategy (potential deal breaker/discount in the form of a guarantee or price reduction).
Increasingly, however, initial analyses and investigations based on publicly available information are being carried out even earlier in the process (pre due diligence). The focus of these activities is primarily strategic (industrial), consisting of monitoring of the market environment and potential target companies. This basic information can then be used to derive further analytical objectives for the formal due diligence process.
Depending on the circumstances of the case, a little due diligence work on the part of the seller of a company (vendor due diligence) before initial contact is made with potential buyers can certainly generate added value: this kind of "check up" can influence pricing and is helpful in the development of the seller's own negotiation strategy and line of argument.
