Significance of Due Diligence: Pre Investment Stage | Corporate Law Attorney in Delhi NCR
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Due Diligence is a form of research or investigation conducted by an investor to ensure that the reasonable verifications and precautions are taken to identify or prevent foreseeable risks before they invest their money in the concerned Company or business. Due Diligence is basically a background check on the current status of the Company, the risks associated with it, and also a critical study on the consequences of the business. It is essential for the buyer to determine the genuineness and the legitimacy of the Company and the ownership of its assets and also the existing and potential liabilities he would be involving himself into by investing in the concerned business. However, Due Diligence is a two way street, meaning both the parties of the contract (i.e., the buyer and the seller) perform it. It allows the buyer to feel more comfortable that his or her expectations regarding the transaction are correct. In Mergers & Acquisitions (M&A) purchasing a business without performing due diligence increases the risk to the purchaser. From the seller’s perspective it allows him to maximize the probability of a successful outcome by preparing for the due diligence process.
