Commercial due diligence is a systematic examination and analysis undertaken by a prospective purchaser or investor. Its purpose is to evaluate the commercial risks and potential advantages tied to a company before engaging in a transaction.
The aim of this process is to pinpoint and assess any commercial challenges or uncertainties that could affect the transaction, the company's ongoing activities, or its future potential. Commercial due diligence commonly entails a comprehensive assessment of diverse commercial documents, including sales and promotional materials, customer agreements, pricing structures, and competitive assessments.
he due diligence process involved in conducting a thorough and informative report includes the following stages:
1. LIAISING PROCESS
The liaising process begins with the introduction of a third-party firm. The members of this external firm conduct in-depth diligence reports on behalf of the prospective buyer or private equity firm.
2. PREPARATION OF A GENUINE REPORT
The third party executes the commercial due diligence report which provides analysis regarding the organization’s potential and current market value. Once completed, the firm compiles and delivers a commercial due diligence report to the prospective buyer.
3. REVIEW OF THE DUE DILIGENCE REPORT
In the final step, the prospective buyer reviewing and assessing the third party’s findings. The investigations and respective reports due diligence are all encompassing to hit every faction of the target company.
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