1. Business due diligence
It is mainly to conduct a comprehensive investigation on the industry competition pattern, development trend, core technology and operating conditions of the target company. Its fundamental purpose is to fully understand whether there is room for growth in the industry where the company is located, and to understand what the company relies on to make money and whether it can continue to make money.
2. Financial due diligence
Financial optimal adjustment should be said to be the core work of the whole optimal adjustment. After investigation, it is clear how much money the company has, whether it can make money and how efficient it is to make money. This is also the valuation basis of investment mergers and acquisitions. If there is a problem in the company's financial situation during the best adjustment period, it is likely to adjust the valuation plan or even the acquisition plan.
3. Legal due diligence
The legal perfection of the target company mainly depends on whether there are legal defects in company establishment, qualification examination and approval, asset acquisition and daily operation and how to solve these problems.
Due diligence process
1. The seller designates an investment bank to be responsible for the coordination and negotiation of the whole merger and acquisition process.
2. The potential buyer should appoint a due diligence team composed of experts (usually including lawyers, accountants and financial analysts).
3. The potential buyer and the expert consultant hired by the potential buyer sign a "confidentiality agreement" with the seller.
4. Under the guidance of the seller, the seller or the target company will collect all relevant data and compile the data index.
5. Potential buyers should prepare a due diligence list.
6. Designate a room (also called "reference room" or "due diligence room") to store relevant materials.
7. Establish a program to give potential buyers the opportunity to ask other questions about the target company and obtain copies of documents that can be disclosed in the reference room.
8. Consultants (including lawyers, accountants and financial analysts) hired by potential buyers make a report, briefly introducing matters of great significance for determining the value of the target company.
9. The buyer shall provide the draft M&A contract for negotiation and revision.