Due Diligence Data Room Checklist

When conducting a legal analysis of an object (business, real estate), specialists use information from internal sources, data provided by partners and competitors in the market, and regulations in tax, civil, and labor law.

Tasks of due Diligence

In the course of this work, the experts are faced with the following tasks:

  • Assess and verify the accuracy of information about the financial position in the company’s statements.
  • Analyze the timeliness and correctness of the delivery of accounting and tax reporting.
  • Check compliance with the law and regulations of all title documents.
  • Analyze the accounts receivable and accounts payable reflected in the accounting and reporting, and identify overdue debt.
  • Analyze the business plan and marketing policy of the company.
  • Conduct an assessment of the effectiveness of management.
  • Analyze and evaluate the competitive advantages of the company in the market.

Naturally, the whole process involves checking a lot of documentation and reports. And in today’s digitalized world, no one wants to work with paper sample documents. So the virtual data room comes to the rescue.

Checklist of steps to conducting due Diligence

Due Diligence is a comprehensive analysis of the entire set of relationships within the company and its interaction with the environment in which it operates. Conventionally, this study can be divided into several blocks, which differ from each other both in terms of goals and methods of conducting. However, all these blocks are essential for a comprehensive study of the activities and financial condition of the company.

These are the blocks:

  1. Operational analysis (analysis of business organization), in which the main areas of study are: the historical development of the company, organizational structure, management, personnel, sales, purchases, strengths and weaknesses, and constraints.
  2. The financial analysis gives a conclusion about the ability of the enterprise to generate income.
  3. Analysis of the tax situation of a business in order to assess the tax burden and the possibility of tax optimization.
  4. Legal expertise determines the company’s activities in accordance with the current regulations in civil, labor, and corporate law.
  5. Analysis of the market position to determine the company’s position in the competitive environment, the potential and prospects for the development of the market, as well as the assessment of the company’s development opportunities in accordance with the market dynamics.
  6. Verification of the impact of the company on the environment – the study of the impact that the activities of the enterprise can have or have on the environment.

Of course, it is not necessary to conduct a full check. Taking into account the purpose of the audit, its necessary and sufficient level is determined.

How can a virtual data room help you?

A virtual data room is a highly secure cloud technology for storing information. You can create your own space (virtually) where you can upload all the files you need for verification.

Everyone who will work with the documentation receives one or another level of access: someone can watch, someone can watch and comment, someone can make comments, and so on.

VDR reliably protects information, as bank data encryption keys and double authentication are used.

In addition, all participants in the process can be in touch 24/7, view documents at any convenient time, and not depend on each other as much as possible. And companies do not spend money on renting an office and paying travel expenses for employees.

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