Due diligence provides corporate clients higher level of transparency by identifying potential business partners integrity and business standards. When a prospective business partner joins your business there is a conditional deal with certain events.
There have been many fraud cases filed by elite corporate companies on their business partners. These fraud cases are due to the bad practices of their business associates. Every year corporate companies lose billions of dollars filing law suit against their business counterparts.
There are various issues that trouble corporate clients like finding effective risk management solutions. When big companies conduct reconstruction of civil infrastructure in other parts of the world as per the contract agreement, the most important issue that arises is the issue of security. Many of these contracts are won in the countries where there is law and order problem. Thus many corporates perform the due diligence process by outsourcing it to a company that can provide competent risk management solutions.
Majority of fraud cases occurs during the process of buying a business, as it involves continging agreement with many dependencies. The due diligence process is performed by the company which is buying the business on their business counterparts and their selling business.
Many companies perform due diligence on following issues:
o Checking in the financial records of the company. The records include recent balance sheet and income statements.
o Examining business income tax returns, also validating the stated business financial returns.
o Assessing the assets of the business sale property including equipments age, serial number and market value. Also acquiring and analyzing the equipment lists which are to be leased.
o Reviewing the business premises, checking in basic security issues and analyzing lease contract papers thoroughly.
o Acquiring detailed information on employees working in the company, check in their details like job profile, tenure, bonuses including contract labor. It is better to outsource this job of reviewing to a lawyer or a risk management company which can perform due diligence as per the federal law.
o Acquiring a copy of contract with your potential business counter part.
o Reviewing the operating procedures including licenses required for smooth operation.
o It is important to verify and reassure by checking in lawsuits filed by the company and against it.
Dealing with all these issues alone can be very time consuming and expensive. It is better if you hire a company that offers competent risk management solutions.