Type of Due Diligence Coverage Includes

Financial Review of target company’s financial position,

financial risk, working capital, debt/lease
arrangements and projections.
Review of projections – work similar to review of
prospective financial information.
Commercial Consider markets, CSFs, KPIs, suppliers, customers
SWOT, exit, potential etc.
Useful for planning post acquisition strategy as well
as valuation purposes.
Operational Consider operation risks and potential improvements
which could be made in target company.
Technical Whether promised technological benefits, are likely
to be realised. E.g. in IT, pharmaceuticals,
engineering, biotechnology.
Information Technology Suitability and risks arising from IT factors in the
target e.g. skils, compatibility of target and acquirer,
post acquisition strategy
Legal Items impacting on valuation e.g. hidden liabilities,
onerous contracts.
The acquisition process e.g., rights and obligations of
parties involved.
New Group Structure
Human Resources HR audit, employment contracts review, training
needs, pension scheme obligations, redundancy
review, legal compliance.
Tax Assess tax risks and benefits e.g.
- Explanation of reason for disposal structure
- CT reference details
- Copies of tax computations
- Copies of correspondence with HMRC
- Details of pre-disposal VAT group
- Details of CT group payment arrangements
- Details of transactions with connected parties
(for transfer pricing purposes)
- Details of payroll arrangements and copies of
correspondence re. PAYE/NIC