Page 328 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

(CNO—DD.120) WORK APPROACH TO DUE DILIGENCE
Business Purchase & Valuation:
- The purchase of business in many instances is the largest and most expensive assets purchase in life time and
therefore some caution should be exercised through the due diligence process. Therefore, assessing the
businesses fair value passes through.
Evaluation & On-Site Analysis:
- Reviewing and reporting on the financials submitted by the target company.
- Assessing the business first hand by a site visit (if applicable).
Collaboration & Finalizing Offers:
- Working through the due diligence process with the acquisitioning company or investor by defining the key
areas.
- Helping prepare an offer based on completion of due diligence.
Strategic Market Alignment:
- Discovering the correct strategy is always challenging, especially in tough economic circumstances. Each
situation is unique.
- The variables are numerous: company age, markets, geography, price levels, competitive dynamics, among
others.
- Aligning a company and its products to market needs can lead to significant performance improvements.

(CNO—DD.140) HOW TO CONDUCT DUE DILIGENCE
Mindset & Approach:
Start with Open Mind:
Start with an open mind. Do not assume that anything wrong will be found and look for it.
Risk Management Approach: Take a risk management approach. While you want to research, ensure you do
not antagonise the team of the target company with many questions.
Identify Trouble Spots: What needs to be done is to identify trouble spots and ask for explanations.

Team & Expertise:
Get the Best Team: Get the best team of people. If you do not have a group of people inside your firm that can
do the task, there are due diligence experts you can hire.
Experience in the Industry: When hiring such professionals, look for their experience record in the industry.

Comprehensive Analysis:
360-Degree View: Get help in all areas like finance, tax accounting, legal, marketing, technology, and any
others relevant to the assignment so you get a 360-degree view of the acquisition candidate.
Talk to Resources: Talk to customers, suppliers, business partners, and employees. They are great resources.

Final Output:
Comprehensive Report: Prepare a comprehensive report detailing the compliances and substantive

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