Due Diligence: What it is, why is it important and how Biji Deals can help you.

What is Due Diligence?

Due diligence is the process of collecting and analysing information to verify and confirm relevant facts.

In layman’s terms, due diligence is essentially doing ‘homework’ on a potential deal or relationship.

Just like how a potential employer would run background check on you before officially employing you by requesting for your three (3) month payslips and conduct a reference check (i.e. contacting your previous employer or colleagues to better understand you as an employee).

Or when a bank staff requests for your personal information and performs their checks on you before onboarding you as a customer.

These are real life examples of what due diligence is.

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Importance of Due Diligence

Both investors and investees benefit from a due diligence process. Due diligence helps investors to learn more about the potential business owner and the investment they will put in, whereas investees can align their interests with a prospective investor and establish a fair amount of investment to seek for their growing business.

“Ensure that you are making the right decision by knowing what you are getting yourself into.”

Using the marriage analogy, due diligence can be equated to dating / courtship.

Typically, a couple gets to know one another before committing to marriage, to avoid a divorce over any irreconcilable differences in the future, especially when there are children and other family members involved.

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From an investor’s point of view:

Conducting a due diligence on a potential deal and/or investment allows the investor to obtain a deeper understanding on how a company is currently performing from three (3) different crucial perspectives - financial, operational and legal. Due diligence helps the investors foresee any challenges that may restrict/impede the growth of the company and whether that impacts their return on investment in the future.

From an investee’s point of view:

Due diligence is not only performed for investors. It is not uncommon for investees to prepare a due diligence report on their company before seeking investments. Through a thorough due diligence process, investees may discover a fairer market value of the company and/or areas to improve on. On the other hand, such initiatives and actions will help in earning the trust of an investor.

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How We Can Help

Biji Deals LLP as an independent party will assist you and add value throughout the due diligence journey regardless of whether you are an investor or an investee.

We are committed to providing financial due diligence (includes potential liabilities arising from legal matters) to help you understand the finances of a company and an operational due diligence which ultimately uncovers any internal control matters.

We have the right expertise to confirm and verify all information brought up during a prospective deal as well as identify any potential defects which could be essential to avoid a bad business transaction.