To identify potential risks associated with the acquisition of a new company
Due diligence refers to a set of investigation and review procedures used to identify risk factors related to the acquisition and future operation of a business.
It includes legal, accounting, tax, environmental, technical, scientific and commercial analyses.
It provides an independent external opinion, a form of security that lets you know, for example, if you are paying the right price or if the risks are too high.
The stakes are sometimes high and millions of dollars can weigh in the balance. If an entrepreneur is considering the acquisition of a company that is worth more than his own business, he will want to avoid making the slightest mistake. The wise thing to do is therefore to consult experts who carry out due diligence on a regular basis.
Due diligence serves to validate if the purchased company is compliant and meets the standards such as to minimize the risks of unpleasant surprises at a later time.
To obtain more information on the company you are interested in buying
Once the purchase price and financing structure have been determined, a letter of intent or a conditional offer to purchase is drafted with the assistance of a lawyer or a notary to secure an exclusive right of purchase for a determined period.
That is when we carry out due diligence to validate that you are paying a fair price for the company you are considering to acquire.
The seller opens up his books to us and gives us access to the information we need to answer the following questions among others:
- What are the assets that are acquired?
- What are the debts against these assets?
- Are any lawsuits pending?
- Should the working capital be sufficient to allow the company to grow?
- Are orders comparable to historical levels?
- Is there work underway and how has it been quantified?
- Are the inventories overvalued or undervalued?
- Are salaries and sales taxes properly accounted for?
- Are there any commitments toward a union?
- Are there any environmental commitments involved?
- Are specific permits required to operate the company?
At this stage, we undertake discussions with the management and accountants of the company targeted by the acquisition.
We may also advise you in partnership with various experts during the complementary stages of a due diligence process, for example with respect to production, human resources, sales, purchases, intellectual property, other assets and liabilities as well as legal and environmental issues.
Throughout the process, we remain in close communication with you to keep you informed of our observations and the issues they raise.
For more information on our due diligence services, please contact our CPAs specialized in advisory services.
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