Due Diligence

Business involves a lot of risks, especially when it comes to investments and large transactions. However, risks can be prevented and minimised by «due diligence». Due diligence procedure is specially provided for this - risk assessment and objective research of the investment object.

«Due diligence» procedure allows you to do some due diligence meaning to form an adequate representation of the investment object and make an informed decision based on the information obtained. However, in Russia there are no regulations that regulate this procedure, so the nature of research depends on the tasks of the prospective investor.

Direct meaning of the term «due diligence» has its history. This legal term came into being in the first half of the 20th century, and brokers started using it. They were checking out the companies whose shares were being sold. Then due diligence became popular in banks that required customer information. Gradually, the procedure was also incorporated into business processes.

The modern due diligence procedure is a complete audit of the company's activities from the legal, organisational and financial side. It is designed to create a transparent and objective picture of the object of investment. And it is necessary if you are planning a large investment in the business, whether it is the purchase of real estate or the acquisition of another company.

DVP's experienced lawyers will help you get correct and comprehensive information about the upcoming transaction. To do this, we use the following four verification methods:

The cost of due diligence is determined by the amount of work that needs to be done to provide you with current information. This service is always worked on by a team of experts who can assess the prospects of business, bankruptcy risks.

This service is necessary in all cases when you plan to invest directly or indirectly: buy a stake in a business, become a co-founder or sponsor, issue a large loan, carry out a merger or acquisition of a company. The help of specialists will reduce risks, allow to know in advance about business problems, and even reduce the cost of purchase.

Potential investors should resort to due diligence when they want to know the market value of the enterprise, the presence of debts and litigation. Proper valuation of the business will help to avoid future corporate conflicts, invalidation of the transaction or loss of rights to the property.

However, it is not only potential investors or buyers who can turn to experts. Owners of business or assets can also use our services to provide interested partners with a competent and attractive business offer. It makes it much easier to find good investors.

Theoretically, in-house expertise, if available, can help. However, the help of independent specialists is always preferable - only so you can be sure of the objectivity of the assessment. First, our attorneys will discuss with you the purpose of the inspection, the scope and duration of work. They will familiarise themselves with the basic documents and prepare a service contract.

The sources for experts are documents such as financial and technical statements, corporate documents, title papers, contracts and contracts, as well as local acts and licenses. In addition, experts consider the management of the enterprise, collect information about its owners. One of the sources is personnel policy.

The full list of sources of expertise depends on the specifics of the business. Information on subsidiaries and representative offices, as well as patents and trademarks, is sometimes needed. Mandatory stage of verification is an assessment of the reliability and integrity of the counterparty, without which it is impossible to get an idea of reputational risks in the transaction. Only after the experts assess the tax, financial, legal and technical viability of the enterprise, they can go to the final stage of work - drawing up a conclusion and recommendations.

The full list of sources of expertise depends on the specifics of the business. Information on subsidiaries and representative offices, as well as patents and trademarks, is sometimes needed. Mandatory stage of verification - assessment of the reliability and integrity of the counterparty, without which it is impossible to get an idea of reputational risks in the transaction. Only after the experts assess the tax, financial, legal and technical viability of the enterprise, they can go to the final stage of work - drawing up a conclusion and recommendations.

The result of examination of a business or other investment object is a written conclusion, analytical reference or report. It is a document that contains information on the actual situation, legal violations by the counterparty and their consequences, as well as recommendations to reduce risks and address deficiencies.

When experts find irregularities, this does not mean that they are serious mistakes or misdemeanours. Most often, our specialists have to face such shortcomings as mistakes in the form of documents, the absence of some structural elements of the enterprise. But there are also serious violations such as concealment of income from tax inspection.



So, based on the results of the audit, we give the customer a report containing information on all the financial, tax and legal risks identified, opportunities to minimise or eliminate them. In addition, due diligence is the estimation of financial reporting indicators and their real values in case of detection of deviations. In conclusion, the customer is given recommendations regarding the potential investment object. Expertise is better to be carried out at the stage of negotiations with the counterparties, before you make a decision or you face obligations. Our experts are ready to accompany the deal from the start of the negotiations, but you can rely on the support of DVP experts at any time. We guarantee high quality and impartiality of the inspection, objective report and effective recommendations.