Due Diligence & Valuation Varun Dhingra

Mergers & Acquisitions – Deal Lifecycle

Types of Due Diligence

01

03

02

04

LEGAL

COMMERCIAL/BUSINESS

OTHERS

FINANCIAL

Types of Due Diligence

Legal Structure

Contracts

Loans

Property

Employment

Pending Litigation

Earnings Assets

Liabilities

Cash Flow

Debt

Management

Customers

Competitors

Business Plan

Market Viability of Product

Assets

Taxes

Intellectual Property Rights

Environmental

Main Elements of Due Diligence

Company Analysis

Assessment of Sustainability of Earnings

Income Statement &Balance Sheet Analysis

Taxation and Related

People’s Matters

Legal, Compliance & Regulatory

Due Diligence – Case Studies

Fin-Tech

Restaurant Chain

FMCG Company

Type of DD Key Risk Discovered Recommendation to Investors Direct impact on Valuation

Financial & Legal Due Diligence

Commercial & Financial

Due Diligence

VendorDue

Diligence (Self DD)

• Presence of considerable debt on the business

• Impact of Political, Social, Economic and Technological factors not accounted in the growth plan

• Renous recommended Controllership (Portfolio Monitoring) to the investors

• Reduced valuation numbers

• Sudden increase in some expenses not capitalized for

• No internal process to account for humongous cash sales and payments

• Not applicable

• Incomplete hierarchy till the senior management

• Liquidity Crunch• Limited internal controls

for appropriate treatment of cash receipts

• Renous gave the necessary recommendations to the investors

• Yes, however neutral discussion around valuation

• Increase the probability of higher valuation numbers