DUE DILIGENCE Kavita Budhiraja Assistant Manager – Corporate  Corporate Professionals (India) Private Limited
DUE DILIGENCE <ul><li>Today's Agenda </li></ul><ul><li>Module I </li></ul><ul><li>Understanding the concept </li></ul><ul>...
DUE DILIGENCE <ul><li>Module I </li></ul><ul><li>Understanding the concept </li></ul>
UNDERSTANDING THE CONCEPT “ Risk comes from not knowing what you’re doing.” Warren Buffet, Chairman, Berkshire Hathaway
UNDERSTANDING THE CONCEPT Due Diligence is the process of fact-finding, evaluation and analysis of data, intended to seek ...
UNDERSTANDING THE CONCEPT Due Diligence is the process of  fact-finding, evaluation and analysis  of data, intended to see...
DUE DILIGENCE <ul><li>Module II </li></ul><ul><li>Importance </li></ul>
IMPORTANCE <ul><li>Caveat Emptor  : Let the buyer be beware </li></ul><ul><li>Confirming representation of facts and event...
DUE DILIGENCE <ul><li>Module III </li></ul><ul><li>Segregation: Event based & Subject based </li></ul>
TYPES OF DUE DILIGENCE
TYPES OF DUE DILIGENCE EVENT BASED  DUE DILIGENCE
TYPES OF DUE DILIGENCE SUBJECT BASED  DUE DILIGENCE
DUE DILIGENCE <ul><li>Module IV </li></ul><ul><li>Flow of Work </li></ul>
WORK FLOW
DUE DILIGENCE <ul><li>Module V </li></ul><ul><li>Practical Environment: Conducting Due Diligence </li></ul>
PRACTICAL ENVIRONMENT Access restrictions Complete Access Data Room e  -Data Room
PRACTICAL ENVIRONMENT: COMPLETE ACCESS COMPLETE ACCESS <ul><li>All information is provided with free management access </l...
PRACTICAL ENVIRONMENT: DATA ROOM DATA ROOM <ul><li>Controlled environment.  Limited information and management access </li...
PRACTICAL ENVIRONMENT: E – DATA ROOM e - DATA ROOM <ul><li>Similar to a physical data room, but information is set up on a...
DUE DILIGENCE <ul><li>Module VI </li></ul><ul><li>Decision  variables </li></ul>
DECISION VARIABLES <ul><li>Assessment that the business is what it appears to be </li></ul><ul><li>Qualitative and quantit...
DECISION VARIABLES <ul><li>Identification of potential deal breakers  </li></ul><ul><li>Secure information useful in valua...
CASE STUDY Case Study – 1 & 2
THANK YOU Thank You Kavita Budhiraja [email_address] 9818587794
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Cp knowledge: due diligence kavita budhiraja - nirc

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Cp knowledge: due diligence kavita budhiraja - nirc

  1. 1. DUE DILIGENCE Kavita Budhiraja Assistant Manager – Corporate Corporate Professionals (India) Private Limited
  2. 2. DUE DILIGENCE <ul><li>Today's Agenda </li></ul><ul><li>Module I </li></ul><ul><li>Understanding the concept </li></ul><ul><li>Module II </li></ul><ul><li>Importance </li></ul><ul><li>Module III </li></ul><ul><li>Segregation: Event based & Subject based </li></ul><ul><li>Module IV </li></ul><ul><li>Flow of Work </li></ul><ul><li>Module V </li></ul><ul><li>Practical Environment: Conducting Due Diligence </li></ul><ul><li>Module VI </li></ul><ul><li>Decision variables </li></ul>
  3. 3. DUE DILIGENCE <ul><li>Module I </li></ul><ul><li>Understanding the concept </li></ul>
  4. 4. UNDERSTANDING THE CONCEPT “ Risk comes from not knowing what you’re doing.” Warren Buffet, Chairman, Berkshire Hathaway
  5. 5. UNDERSTANDING THE CONCEPT Due Diligence is the process of fact-finding, evaluation and analysis of data, intended to seek information about risks pertaining to a transaction/ entity, to enable informed decision by the person seeking the information.
  6. 6. UNDERSTANDING THE CONCEPT Due Diligence is the process of fact-finding, evaluation and analysis of data, intended to seek information about risks pertaining to a transaction/ entity, to enable informed decision by the person seeking the information.
  7. 7. DUE DILIGENCE <ul><li>Module II </li></ul><ul><li>Importance </li></ul>
  8. 8. IMPORTANCE <ul><li>Caveat Emptor : Let the buyer be beware </li></ul><ul><li>Confirming representation of facts and events: Businesses are not run on promises </li></ul><ul><li>Avoiding future conflicts </li></ul><ul><li>Identifying grey areas: Even existing stakeholders are ignorant about certain fallbacks </li></ul><ul><li>Analysis of data may range from ‘Watchdog’s eyes’ to ‘Bloodhound nose’, depending upon purpose of due-diligence </li></ul><ul><li>Identifying off-the-record issues, viz. contingent liabilities, siphoning off, vested interests, etc. </li></ul>
  9. 9. DUE DILIGENCE <ul><li>Module III </li></ul><ul><li>Segregation: Event based & Subject based </li></ul>
  10. 10. TYPES OF DUE DILIGENCE
  11. 11. TYPES OF DUE DILIGENCE EVENT BASED DUE DILIGENCE
  12. 12. TYPES OF DUE DILIGENCE SUBJECT BASED DUE DILIGENCE
  13. 13. DUE DILIGENCE <ul><li>Module IV </li></ul><ul><li>Flow of Work </li></ul>
  14. 14. WORK FLOW
  15. 15. DUE DILIGENCE <ul><li>Module V </li></ul><ul><li>Practical Environment: Conducting Due Diligence </li></ul>
  16. 16. PRACTICAL ENVIRONMENT Access restrictions Complete Access Data Room e -Data Room
  17. 17. PRACTICAL ENVIRONMENT: COMPLETE ACCESS COMPLETE ACCESS <ul><li>All information is provided with free management access </li></ul><ul><li>Copies of all information provided </li></ul><ul><li>Regular information requests to update Client and Target of status of diligence </li></ul><ul><li>While overall field work duration may be regulated, generally, timings are flexible and typically no restriction on team size </li></ul>
  18. 18. PRACTICAL ENVIRONMENT: DATA ROOM DATA ROOM <ul><li>Controlled environment. Limited information and management access </li></ul><ul><li>Typically, no copies provided. Time and effort required for inputting data </li></ul><ul><li>Information requests and question lists are critical as further information and responses are dependent on such lists </li></ul><ul><li>Generally overall duration and daily timings are regulated and team sizes are restricted </li></ul>
  19. 19. PRACTICAL ENVIRONMENT: E – DATA ROOM e - DATA ROOM <ul><li>Similar to a physical data room, but information is set up on a website </li></ul><ul><li>Most e-data rooms have restrictions on printing and copying. Time and effort required for inputting data </li></ul><ul><li>Information requests and question lists are critical as further information and responses are dependent on such lists </li></ul><ul><li>Fixed logins are allotted. Team sizes can be flexible if logins shared. Timings may or may not be regulated, though overall duration is fixed </li></ul>
  20. 20. DUE DILIGENCE <ul><li>Module VI </li></ul><ul><li>Decision variables </li></ul>
  21. 21. DECISION VARIABLES <ul><li>Assessment that the business is what it appears to be </li></ul><ul><li>Qualitative and quantitative analysis on financial performance and to get a sense of normalised earnings </li></ul><ul><li>Are there hidden liabilities/ onerous clauses in contracts/ other exposures, which may impact future earnings/ profitability </li></ul><ul><li>Identify operational inefficiencies and what it will take to enhance </li></ul><ul><li>Ascertaining unreported tax risks, may come out to be high enough to wipe off total investments </li></ul><ul><li>Analyzing other entities in the group to check vested interests </li></ul><ul><li>Verifying outstanding litigations and their possible impact on business and profitability </li></ul>KEY ANALYSIS ISSUES
  22. 22. DECISION VARIABLES <ul><li>Identification of potential deal breakers </li></ul><ul><li>Secure information useful in valuation </li></ul><ul><li>Negotiating price concessions </li></ul><ul><li>Defining representations and warranties </li></ul><ul><li>De-linking of vested interests and entities </li></ul><ul><li>Integration opportunities </li></ul><ul><li>Operational revamping </li></ul>POSSIBLE IMPACTS
  23. 23. CASE STUDY Case Study – 1 & 2
  24. 24. THANK YOU Thank You Kavita Budhiraja [email_address] 9818587794

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