Things to Know about Investment Due Diligence

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Things to Know about Investment Due Diligence
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Introduction
Investment due diligence is a process of
extensive and intensive research to evaluate an
investment decision, considering all
possibilities and verifying the information
used. These audits are necessary investigations
of a potential investment to avert risks before
entering into an agreement or a financial
transaction with any organisation.
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Purpose and Importance
In the financial world, investment due diligence
is performed by companies seeking acquisitions,
by ?equity research analysts ?fund
managers ?broker-dealers ?investors For
individual investors, due diligence is a choice,
but recommended for mitigating security risks.
Broker-dealers, however, are legally obligated to
conduct due diligence on security as it helps
them avoid being held liable for non-disclosure
of pertinent information.
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Process

• Analyse the Capitalization (Total Value) of the
  Company
• Revenue, Profit, and Margin Trends
• Knowing your competitors and Industries
• Identifying valuation for both the company and
  its competitors
• Details about the management and shared ownership
• Consolidated balance sheet
• Stock price history with stock options and
  dilution possibilities
• Examine long and short-term risks

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Features

• Provides history and background about the
  companies
• Deal considerations
• The financial performance (operating
  effectiveness and earnings quality)
• Strengths, weaknesses, and commitments of
  employees
• Financial rating
• Cash flow assessment
• Due diligence on tax
• Database and media checks

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Benefits
Investment due diligence helps audit potential
investment to confirm all facts, such as
reviewing all financial records, plus anything
else deemed material. ?Tech-enabled delivery of
comprehensive business research ?Quick
turnaround with detailed reporting ?Best in class
client servicing through a combination of account
management and CRM Robust and highly customizable
client-end processes to suit the specific needs
of every client
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Conclusion
Wise and timely feedback on the quality and
accuracy of investment information is the basis
of a good decision-making process.
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