An Introduction to the Different Types of Due Diligence

An Introduction to the Different Types of Due DiligenceThe term due diligence broadly refers to all the research done to ensure a deal is legitimate, but there can be many different types of due diligence for different kinds of businesses.

Types of Due Diligence

  • Legal
  • Financial
  • Merger and Acquisition
  • Customer
  • Human Resources
  • Environmental
  • Taxes
  • Commercial

Legal

One of the most important and most common types of due diligence, legal due diligence examines and reviews a wide variety of legal documents, ranging from board meeting minutes to contracts.

Financial

Financial due diligence checks the financial health of the assets up for sale. It provides the buyer with valuable information regarding the past, present and future financial performance of the asset.

Merger and Acquisition

Also known as M&A, this type of due diligence investigation helps the buyer determine how a merger or acquisition might play out in the future, and if the deal is actually worth it.

Customer

Customer due diligence is the process of identifying who a company’s customers are, and whether those customers are involved in illegal activity, such as money laundering or terrorist activities.

Human Resources

This is one of the most extensive types of due diligence, and it can involve anything from analyzing current employees and salaries to determining the potential impact of a labor dispute.

Environmental

Environmental due diligence is related to environmental regulations and ensuring a company is following said regulations. Environmental permits, licenses and company disposal methods are just a few of the many things that are reviewed.

Taxes

Regarding tax liability, this type of due diligence reviews all of the taxes a company is required to pay and ensuring there is no under-reporting of those taxes.

Whatever due diligence service you require, Intelex, Ltd can provide it. Contact us today for more information.