A Comprehensive Guide about Types of Due Diligence

Successful and progressive organizations do not only focus on their production and sales, but they make hefty investments in other ventures and consider acquisition opportunities to grow their success even more. However, every investment and acquisition may not be successful and lead the organization to loss instead of profit. That is why implementing due diligence is inevitable.

Due diligence is the process of getting detailed insight into the health of a business to ensure that it will render profitability. It is conducted by certified professionals. The major purpose of due diligence is to boost the trust of potential investors and stakeholders in a business organization as well as show that it is following the set standards. Conducting various types of due diligence is more than necessary to establish the claim.

Dig deeper into this article to explore a comprehensive guide about types of due diligence and make sure to implement them before making bigger decisions.

Top 8 Types of Due Diligence You Must Consider During Audit

Finances are not the only thing that constitutes a business and play their role in its development and progress. There are many other aspects that contribute to the overall progress. Therefore, when you want to establish the credibility of your business, you need to conduct various types of due diligence. Having detailed knowledge about them can help you better utilize them.

Here are some of the major types of due diligence you must consider during the audit.

1.    Financial Due Diligence

The first and most important type of due diligence is financial due diligence. As the name shows, it focuses on the financial aspects of the business like the business strategy, feasibility analysis, financing and transaction terms, etc. all of this requires expert skill; therefore, most business organizations hire services of the top audit firms in Dubai and ensure proper due diligence of their business.

2.    Accounting Due Diligence

The next type of due diligence is accounting due diligence. This particular type focuses on ensuring that the organization complies with the accounting rules and policies. Moreover, it also focuses on checking the trends and performing financial ratio analysis, financial statement audit, and checking internal controls of the organization.

3.    Legal Due Diligence

Another significant type of due diligence is legal due diligence. The legal due diligence focuses on the assessment of the balance sheet, as well as the off-balance sheet liabilities and the potential risks that can endanger the [position of the organization. Evaluating the credibility of the proposed transaction and its execution is also an important part of the legal due diligence procedure.

4.    Tax Due Diligence

One of the most critical types of due diligence is tax due diligence. Tax due diligence is ducted to ensure that the organization or business is fulfilling its tax duties efficiently. Tax due diligence focuses on analyzing tax position, tax exposure, impact assessments, and tax-saving opportunities. It is significantly important to establish the credibility of the organization.

5.    Intellectual Property Due Diligence

One of the most critical types of due diligence is intellectual property due diligence. Intellectual property includes the copyrights, trademarks, brand name, license, and other such details that are associated with the identity of any business organization. The intellectual property due diligence focuses on checking the claims against the organization.

6.    Human Resource Due Diligence

Another significant type of due diligence is human resource due diligence. This particular type focuses on checking the credibility and importance of the human resources employed in an organization. It checks the number of employees, their positions, roles, and responsibilities, as well as qualifications and salaries. It also considers the bonuses or other perks offered to the employees and how all of this impacts their performance and motivation.

7.    Asset Due Diligence

Another important type of due diligence is asset due diligence. As the name shows, asset due diligence focuses on checking and establishing the credibility of the assets of the organization. It includes the fixed assets of the organization as well as its location, the equipment, its sales, purchase and lease, and other related aspects.

8.    Strategic Due Diligence

The last type of due diligence that business organizations should know about is strategic due diligence. This type of due diligence specifically focuses on assessing the strategic position of the business and how it will benefit the investors, stakeholders, or in case of merger and acquisition. You can consult www.bensauditors.com if you also want to conduct strategic due diligence on your business.

Do you need to conduct due diligence?

If you want to attract investors or are considering merger and acquisition opportunities, conducting due diligence can help you make a better decision. Contact the certified professionals now and make sure to get credible due diligence audit reports.