Due Diligence, a Comprehensive Business Inspection

Due diligence is a procedure for thoroughly investigating a company and its activities in order to ascertain that the information studied does not contain any inaccuracies, distortions, or omissions. The procedure involves studying the company and its management, analysing existing agreements, contracts, and financial accounts, drafting different potential versions for the company’s future development, and investigating the sectors and markets on which the company works.

This service includes a full investigation of the enterprise’s activities and of the analytical processes on which management decisions both internal and external, regarding investment, are based.

Doing due diligence includes inspection of:

• Corporate and legal documents;
• License to issue shares and register them, issue prospectus;
• Rules of order for the stockholder register;
• Compliance with the established procedure regarding the concentration of a controlling stake held by a group of stockholders;
• The company’s rights to real estate;
• Debt obligations;
• Licenses and permits;
• Basic contracts with partners;
• Reports of judicial and arbitration proceedings;
• Financial and tax accounts;
• Detailed information about key managers: name, address, age, experience, role, job description, remuneration and incentive package;
• The company’s rules and procedures and materials and documents on employee recruitment and policies on further training;
• Existing internal structure, specifically: who plans, controls, and executes which functions, and who analyses the results, and also which management decisions and actions are usually acted upon;
• Policies and operational procedures for marketing, sales structure, methods and programmes including the function of retail personnel, and special and standard product promotional activities.

Based on the results of these investigations, we prepare our findings with these results:

• Financial Due Diligence, presenting the findings about the enterprise’s ability to generate income. In the process of our financial analysis we study the company’s shares, income, financial coefficients and systems of financial planning and oversight;
• Tax Due Diligence, presenting the findings about the weight of the tax burden on the enterprise;
• Legal Due Diligence, presenting the findings about the conformity of the company’s activities with its normative documents in civil and labour law, and also in the area of corporate legislation.

Doing Due Diligence is labourious and not cheap. When acquiring small or medium-sized companies, clients often prefer to stop at a legal and audit check of the company.

BAZALT Legal Centre has a great deal of experience in conducting checks connected with buying companies (Due Diligence). Our experience shows that all organisations have some sort of irregularities. Some of these can just be ignored. But others must absolutely be rectified before the enterprise can be purchased. And there are certain cases in which the mistakes cannot be fixed.

Based on the analysis conducted by our experts, our specialists will issue a recommendation on eliminating the uncovered irregularities. Generally, the results of the investigation serve as a basis on which to lower the cost of acquiring the enterprise.

BAZALT Legal Centre employees are ready to consult with you on any and all questions relating to purchasing a business.

Legal consulting department.

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Moscow Russia
tel.: +7 495 981 19 39,
fax: + 7 495 737 43 81