Due Diligence

Due Diligence (which means provision for good faith) is a procedure of formation of impartial idea of the investment object.

It is reasonable to perform Due Diligence in the cases as follows:

  • Before acquiring ready business or purchasing holding of stocks (shares) of the company.
  • Before acquiring expensive assets (immovable property, intellectual property objects, securities).
  • When preparing merger or joining of the company.
  • For the purpose of revelation of violations of the company’s activity.

Purpose of the Due Diligence procedure consists in avoiding or reducing as much as possible existing entrepreneurial risks (economic, legal, fiscal).

Due Diligence is a formation of independent impartial opinion on the matters as follows:

  • Legal status of the company.
  • Risks of loss of property rights, legal proceedings.
  • Financial situation and financial risks of the company.
  • Tax risks of the company.
  • Situation at the market.
  • Personnel potential of the company.
  • Risks in the company’s management system.

Due Diligence is performed in the areas as follows:

  • Legal Due Diligence: analysis of the company’s incorporation and registration documents; analysis of licenses and permits, etc.
  • Financial Due Diligence: analysis of the Company’s income and expenses; analysis of the company’s liabilities, etc.
  • Fiscal Due Diligence: analysis of indebtedness on payment of Russian taxes, fines and penalties; analysis of probable tax risks of the company on kinds of taxes (duties), etc.
  • Market Due Diligence: analysis of degree of the company’s dependence on its suppliers; analysis of the company’s pricing system and degree of its compliance with market situation, etc.
  • HR Due Diligence: assessment of the HR management system in the company (recruitment, employment, adaptation, training, attestation); assessment of risks related to resignation of key employees in case of change of owner, etc.
  • Organizational Due Diligence: assessment of workflow system in the company; assessment of compliance of used information systems with the needs of the company’s business, etc.

When performing Due Diligence, analysts, auditors and lawyers of Company “RosCo” work in close cooperation.

According to the results of Due Diligence performance, a detailed Report is prepared which includes information concerning revealed legal risks, legal assessment of probable adverse consequences which can be caused by the said risks, recommendations on removal of the revealed risks or minimization of consequences thereof.