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The purchase of an enterprise also means many potential risks in the legal and tax area. Such risks are not necessarily visible at first sight.
You wonder whether upon taking over the enterprise an audit by tax authorities may result in payment of taxes you had no knowledge about whatsoever. You wonder whether the purchased business might have had a record of notorious violation of labour law, copyright, environmental regulations – which could result in costly proceedings, penalties and recompensation. Finally, you wonder if the business analyses conducted on basis of delivered financial data are accurate – in case you are not entirely sure whether the presented information actually reflects the real state of the purchased company.
In other words, you want to be sure as to what you are buying, what is the purchased company's actual financial state, which business lines/products/unit are profitable and which require changes, what are the tax risks and what are the legal risks in view of the purchased enterprise joining your business structures.
All this can be answered by performing a due diligence analysis, which allows for either comprehensive or specific verification of the business entity you are interested in
Due diligence may cover areas of finance, law, taxes, environmental protection, HR, technology, IT etc. Usually the minimum scope covers financial, tax and legal aspects. Due diligence is a great analysis tool in company valuation and an important argument in negotiations. Knowledge on threats and risks, but also opportunities and the potential of the company you are looking to purchase, allows you to make an informed decision, set negotiations in the right direction, start preparing organisational changes beforehand, secure yourself against various risks and make full use of opportunities.
See due diligence services
Meet our due diligence leaders
Our Transaction Advisory Services Team is at your disposal:
- We perform due diligence in the finance, tax and legal field;
- In cooperation with external specialists we perform due diligence in IT, HR, environmental protection and technology;
- We provide company valuation;
- We optimise tax-wise transactions of company acquisition;
- We assist you in the negotiation process;
- We prepare the transaction's legal documentation;
- We perform vendor due diligence;
- If the acquired company is operating also abroad (or only abroad), we cooperate with RSM firms located in the relevant country, coordinate the work of teams in various locations and remain your primary contact in the process.
Frequently asked questions: What should I know about due diligence?
What is due diligence?
To put this issue as simply as possible, due diligence is the process of examining a specific entity (or company or assets) with regard to a planned transaction.”.
Is due diligence mandatory?
No – conducting due diligence is not necessary to conclude the final agreement. However, in the current market conditions, it practically does not happen that the transaction of acquiring an external entity (i.e. not belonging to the same capital group) is not preceded by getting acquainted with the condition of the subject of the transaction (company, enterprise, specific assets). This is what due diligence is for.
Conducting such an analysis is also an expression of due diligence (in this context – proper operation) on the part of the entrepreneur or member of the company's management board. Failure to act in this manner may, in some cases, lead to pecuniary claims or corporate liability of these persons. ”.
How much does due diligence cost?
The cost of due diligence each time depends on the scope of the analysis agreed with the client. The price of the service depends on both the issues being analyzed and the level of detail of the examination of individual issues.
To use an example: as part of determining the scope of due diligence, the client may stipulate that it is necessary to examine only issues related to, e.g. real estate or corporate issues, and may also oblige the advisor to analyze all documents or only a specific sample of them. Given the individual approach required for this type of processes, it is difficult to determine the price range for due diligence. Therefore, in order to determine the exact costs, we encourage you to contact our experts.
How long can due diligence take?
The duration of each due diligence depends not only on the level of involvement of the consultants hired, but also on the scope of the study and the speed at which the client, together with other involved entities, provides documents. At the same time, however, it should be noted that - due to dynamic market changes - all parties involved in the process should strive to conduct it as efficiently as possible, so that the due diligence results refer to the most up-to-date situation of the subject of the transaction.
What documents are required for due diligence?
As part of the due diligence process, documents relating to the subject of the transaction are analyzed, which are provided by the vendor or obtained by the client from other sources.
The documents in question are additionally compared with information included in publicly available registers (e.g. National Court Register, Repository of Financial Documents, Electronic Land and Mortgage Register System, database of the Patent Office of the Republic of Poland), or also with documents submitted to registration or land and mortgage register courts. The documents in question may also serve as an important supplement to the information in case of problems with obtaining it from the vendor.
A detailed catalog of documents each time results from the agreed scope of due diligence.