Due Diligence

Risk Discovery, Legal Clean-Up & Confidence Building

Due diligence is the backbone of any strategic investment, merger, acquisition, or business transaction. It is a comprehensive review of the financial, legal, operational, tax, and compliance health of a company or asset to validate its true value and identify risks.

What It Means

·       Legal Due Diligence: Review of company formation, contracts, litigation, IP, licenses, compliance, and secretarial records.

·       Financial & Tax Due Diligence: Assessment of financial statements, tax filings, liabilities, cash flows, contingent exposures.

·       Operational Due Diligence: Analysis of HR, processes, inventory, IT, and vendor/customer dependencies.

Governing Laws & Relevance

·       Companies Act, 2013

·       Income Tax Act, 1961

·       GST Laws, FEMA, Labour Laws, SEBI Regulations (for listed entities)

·       Essential before any SPA/BTA/Investment, IPO, PE round, or internal restructuring

Process

1.     Collection of data and access to Virtual Data Room (VDR)

2.     Preparation of due diligence checklist

3.     Review of documents and contracts

4.     Management interviews and clarification rounds

5.     Issue identification, risk grading, and recommendations

6.     Due Diligence Report (Red Flag or Full Report)

Key Benefits

·       Identifies hidden liabilities or non-compliance

·       Strengthens negotiation on price and terms

·       Builds investor or acquirer confidence

·       Prepares the company for external scrutiny or audit

Ideal For

·       M&A, JV, PE/VC deals

·       Business purchases and takeovers

·       Promoters preparing for sale or funding

·       Legal teams conducting internal health checks

Basic Requirements

·       Access to key financials, statutory records, contracts

·       Management availability for query resolution

·       Auditor/legal counsel coordination

How LTC can Help

·       Prepare and tailor due diligence checklists

·       Conduct red flag or full-scale legal, financial, and compliance reviews

·       Summarize critical findings in business-impact terms

·       Recommend corrective actions and assist in post-DD compliance clean-up

·       Support deal negotiations based on risk analysis