There are several interpretations of the term "Dew Diligence": "Proper in good faith", "thorough observation", "checking due interest", "a comprehensive study of the information provided". All of them imply a set of actions aimed at checking the purity of the transaction. In world practice, such an inspection is very widespread.

Dew Diligence: Yesterday, today, tomorrow

Nowadays, the need to manage risks in their activities becomes apparent. The requirement of "transparency" when interacting with partners is no longer a tribute to fashion, but the rate is relevant both for large companies leading in the market and for young business aimed at successful development.

Any company intending to conclude an important contract, or an investor planning to acquire business, want to be completely confident in the profitability and security of the future deal. This confidence can only be based on reliable and comprehensive information on the potential counterparty. It is for collecting and analyzing such information a special integrated check, which in world practice the name Due Diligence (Diligence Diligence) is held.

For the first time, the term appeared in 1933 in the United States in the law on securities. Modern standards Dew Diliges were developed in 1977 in Switzerland: several large banks signed the agreement The Swiss Banks Due Diligence, which regulates a single approach to the collection of customer information to protect their property from possible damage.

Later, consulting business was used by the principles of the Agreement for analyzing the Company's activities from the point of view of legal, economic and financial conscientiousness.

On a note
Among the major international companies providing services to Diliges, a special influence enjoy the organization included in the so-called big four: Deloitte, EY, PWC, KPMG.

As for Russia, today there is no regulatory act regulating the procedure.

The need for Due Diligence, according to experts, occasionally increases every year, the share of service is growing in the total amount of audit services. One of the reasons for demand, a trend-forming factor, is to increase the qualitative level of the procedure by Russian consulting companies. According to forecasts, after 5-10 years, the popularity of Diliges Russia will stand in one row with Western countries. To date, the largest companies providing the service, according to the 2015 expert RA rating agency, are CCC Group, Intercom Audit, Mafe Audit, RSM-Rus, PWC.

In what cases is done dued

Initiator of the study usually acts as an investor, but in some cases interested in Due Diligence, the company's shareholders or its top management can be. When making a major transaction, it is very important to have up-to-date information about the financing object, its real value, possible legal and tax consequences of such an acquisition.

In addition, the information obtained as a result of Diligent information can be used in the preparation of emissions of own securities, developing a mechanism for the protection against the acquisition of another company or in other business events.

But the main goal of Dew Diligence is not only in obtaining investments from the financing object. It is extremely important when acquiring expensive real estate objects to ensure the legal purity of the transaction, the absence negative consequences After investing, the compliance of the object's objects of the buyer.

In world practice, Dew Diligence is held at certain stages of the company's development:

• SEED (seed) - Business idea or project, the analysis of which is necessary in order to either reject it or finance.
• Startup.. The company has just originated and has no market history. The procedure is carried out at the start of the project and to make a decision on financing.
• Early.. The initial stage of development when experts are attracted to Diligent Diligence to carry out a painless transition from creating a product to its implementation.
• Expansion. Expansion of the company to enter new markets, an increase in production, conducting marketing research.
• Bridge Financing.. In this case, the procedure is aimed at assessing the feasibility of financing a company that is transformed from a private firm to a public joint-stock company and plans to register shares on the stock exchange.
• Management BUY-OUT and BUY-IN. Dew Diligence is held for the company planning to attract funds to purchase a business or to redeem it from the side.
• Turnarled.. Diligence is needed during the crisis when investments are necessary to stabilize the financial situation of the company.

There are several more situations in which companies are required Due Diligence Procedure:

1. Shared participation of the new owner in the company's activities.
2. Changing manual.
3. Getting sponsorship.
4. Loss of intellectual property.
5. Reduced competitive positions.
6. Reducing the efficiency of the enterprise.
7. Proceedings, the imposition of arrest on the assets of the company.
8. Detection of violations during the tax audit.
9. Labor disputes.
10. And a number of others.

During the test, Due Diligence is carried out a whole range of activities, including an assessment of the accuracy of the company's financial status information, an assessment of the implementation of the implementation of strategic and current plans and the effectiveness of the management system, analysis of the feasibility of policies conducted by the company, search for competitive advantages.

What gives due diligence

The main goal of Due Diligence enterprises - minimization or complete elimination of existing entrepreneurial (economic, legal, marketing, tax) risks:

• non-fulfillment of obligations by the debtor;
• acquisition of shares at an inflated value;
• initiation of litigation (their adverse effects);
• recognition of the transaction invalid;
• loss of material assets, including the imposition of recovery on the property of the company;
• causing damages or loss of intangible assets (Goodwill), in particular the reputation of the company, intellectual property (trademark, know-how, inventions, commercial idea);
• unfair competition, including the emergence of corporate conflicts, such as seizure, unfriendly absorption;
• political or risks loss of administrative resources;
• attracting criminal, tax or administrative responsibility;
• losses or non-receipt of the necessary permits or licenses, on which the implementation of the transaction, project depends.

In carrying out the procedure, as a rule, both parties are interested in - and the investor company, and the company involving investments. Investor, it allows us to evaluate the prospects for the business of interest to its business and the compliance of the object's objects of the buyer's goals, to ensure the legal purity of the transaction and the lack of negative consequences after the acquisition, and the seller confirms its own good faith, which gives him the opportunity to receive more favorable proposals.

The procedure for holding Diligence

The duration of the inspection depends on the size of the business, the volume of the study and can take from several weeks to several months, and in some cases, and up to one year. Dew Diligence can be used by the company's own forces or with the involvement of independent specialists.

What are the advantages of independent holding?

1. Reducing the cost of the procedure.
2. The presence of own knowledge specialists in the field of the organization's main activity.
3. The ability to more accurately formulate conclusions in relation to its specificity.

However, independent Diwa Diligence is possible only in small companies, since a comprehensive analysis of large business requires not only high qualifications of specialists, but also serious time costs. In addition, when purchasing a business from a sphere that does not relate to the Company's main activity, independent Dewgensus will also be difficult. But the most important thing - the procedure should be independent, unbiased, bring the vision of business from outside, from potential or real investors.

Usually, even large banks and professional investors invite third-party appraisal and legal consultants, as this makes it possible to carry out a detailed unbiased comprehensive study.

For the study, three groups of specialists are usually involved:

• Financial analysts and appraisers. Their task includes the determination of the current value of the investment object and its possible range of value at various use of the asset in the future.
• Lawyers. The Group is responsible for conducting legal and legal expertise of the organization's activities to identify potential risks for the investor related to its acquisition.
• Auditors. Their competence includes financial inspection of the company's activities in several reporting periods, as well as determining the tax risks and possible ways to optimize the tax base.

The Diligence Diligence procedure consists of five independent stages, for each of which an objective conclusion is assessed:

1. Operational Dew Diligens. His task is to conduct an examination of the constituent documents of the organization aimed at identifying the structure of ownership of the company, the volume of the rights of each owner and determining risks in this area. During the operational Due Diligence, the correctness of registration of the issue of shares and other securities, the main transactions with them, the fullness of payments to shareholders, checking their property and non-property rights is also checked. The result of the stage is an independent report containing a description of potential risks and recommendations on their leveling.
2. Financial Diligence. At this stage, the main indicators of the financial state of the company are identified, and their analysis is carried out to assess the prospects for the acquisition of business and its further development. This is an assessment of market value with the help of invited appraisers, the calculation of the company's financial stability, its solvency and business activity coefficients. The report on the results of the stage contains all coefficients, indicators and is given an approval of the appraiser.
3. Tax Diligence. The main task is to analyze the company's entire financial and economic activity over the past three years in order to determine its real financial condition and identify potential tax risks. At the tax due diligence stage, accounting and tax reporting, company counterparties are checked, an analysis of the main activities and fixed assets, financial investments, accounts receivable, inventory of property, checking the payment of mandatory payments and identifying hidden accounts. Based on the studies, a report is drawn up with a description of potential tax risks and recommendations for their decline.
4. Legal Dew Diligence. It is carried out during the analysis of the company's assets with the obligatory examination of all the right-expanding documents separately for each asset. The purpose of this stage is to identify the type and volume of assets, the risk of their disposal and the formation of recommendations for protection. Experts also evaluate risks to liability from counterparties and state bodies. It is conducted in the framework of the bodies of bailiffs, arbitration courts, Spark, EGRULT, etc. At the end of the stage, a report is drawn up with the transfer of potential risks and the necessary recommendations.
5. Marketing Dew Diligence. Purpose of the stage - to evaluate the product of the company (product or service) in terms of competitiveness in the market, reveal the risks of inefficient marketing policies.

The result of the inspection becomes an objective and comprehensive analytical report on the financial, economic and legal activities of the company with a description of the main business processes and detailed recommendations for their optimization. A feature of the procedure is that each group of experts is preparing an independent detailed report on the state of affairs in the organization. The most significant information is reduced to the general presentation.

Price policy

Different consulting firms working in the Russian market have different methods The formation of the price of the service of Dew Diligence, however, in general, its holding is quite expensive, since it is characterized by consideration and greater time-consuming.

On a note
Maximum prices - companies belonging to the "big four", while the high quality of the service provided and the confidence from business partners will be guaranteed. However, this does not mean that the consulting agencies of the national or even regional level will hold a DUE Diligence of lower quality. The difference in the price of the service here is determined by the cost of the brand of the consulting company.

Famous russian companieshaving an impeccable reputation in the consulting market, operate in an average price segment. As a rule, they have their own Methods Diligence, verified in practice and allowing to identify and describe all major risks.

The price of the Due Diligence service is consisted of an hourly rate of the work of one specialist, in some cases a man-day is estimated. For example, the average cost of one hour of operation of the tax consultant may be approximately 6,000 rubles, and a lawyer or accountant is about 3,000 rubles.

To determine how to determine what will be the total cost of the service, it is necessary to determine labor costs, based on several factors:

1. Types of research required in a particular company. In some cases, the abbreviated version of Diligence Diligence is possible, which significantly reduces the cost of the procedure.
2. The amount of work and the detail of the technical task.
3. The specificity of the company's activity and its size.

The minimum prices on Diligence can vary from about 70,000 to 140,000 rubles, but in practice, the study will usually cost much more expensive.

As an example, Case Due Diligence CCS Groups for one of the major developers can be brought. The cost of the service is about 1,200,000 rubles. At the time of buying land plot In the center of Moscow, a plant for the production of ice cream was discovered on its territory with a multitude of tenants. Within two weeks, experts CCC Group studied the entire history of economic activities of enterprises, production facilities and assets. It was found that the level of risk when buying a plot is within the normal range, and the promising benefit from the purchase exceeds the cost of holding Diligence several times.

Thus, an objective independent assessment helps to significantly optimize work, avoid unnecessary investments, eliminate the shortcomings, including those that customers sometimes suspect. The result of Dewidgens is confidence in compliance with legislation, the exclusion of "weak links" in the structure of the company, the growth of financial indicators.

Where can I order Due Diligence services?

Since Due Diligence is not only a rather expensive event, but also a vital for organization, to choose a consulting company, you need to approach the most responsible as possible. The financial well-being, business reputation and development prospects of the company may depend on how professionally the analysis will be carried out.

Dmitry Vodocz, head of the Department of International Projects and Tax Practices of CCC, told us about where

"The optimal option is a proven company with solid work experience and a large staff of experts. Often, specific knowledge in the specific industry is required for the DUE DILIGENCE procedure. If the consulting agency works, say, just ten specialists, there is a chance that they may not find the necessary answers to some questions, the risk assessment can be made incorrectly or the procedure will go much more time. The wider the staff of industry experts in the consulting agency and the greater the spectrum of successfully completed projects, the usually more reliable and experienced firm, the higher the quality of the services provided.

In this regard, I would recommend holding a "amateur Diligence" to choose a reliable consulting agency. Read publications in online publications and professional press. Serious consulting firms do not hide information about themselves by placing portfolio and customer reviews on their website. By the way, if you have the opportunity - talk to someone from them: as a rule, this is a completely reliable source. Browse the various rankings published by serious rating agencies. This will eliminate the possibility of cooperation with inexperienced and little-known companies. Here, the whole thing is that by ordering Due Diligence, the client must be sure not only as a service, but also in absolute confidentiality, which companies are best provided with the name and history.

From myself with pride I can say that the CCC of Groups on the results of 2015 took the first place in Russia in the field of legal consulting in the Raex list, and I expect that the results of 2016 will not be worse. We were one of the first consulting companies in the country offered to Due Diligence Legal Audit Services, and during this time managed to work with the most complex and interesting cases. Own developments and rich experiences of specialists allow us to conduct research as efficiently as possible. Cooperation with our company is an opportunity to minimize tax risks, risks of purchase / sale and risks of attraction to justice. "

P.S. - Auditing and consulting company, established in 1994, engaged in management, strategic, financial and IT-consulting, conducting financial audit and value estimation, Due Diligence offering business processes outsourcing. In CCC groups, there are currently 350 sectoral experts that have implemented at least 4500 projects for companies from the real sector of the economy.

Opinion edition

Do not forget: "Warned - it means armed." Due Diligence When carrying out any significant transactions should be the usual phenomenon for Russian business. Unfortunately, so far many entrepreneurs prefer their own intuition with accurate calculations, acting what is called, on maybe. But it's one thing when resources for independent verification of good faith and risk assessment is simply nowhere to take, completely different - human storage and lack of business culture.

The DUE Diligence Procedure (abbreviated - Dued) is gaining increasing popularity among entrepreneurs. Translated from the English term means the following - "ensuring due conscientiousness." The essence of Dew-Diligence is to provide detailed information about the investment facility - the company, real estate or land.

The first mention of DUED dates back to 1933, and its "homeland" is considered the United States. It was there that the term "Due Diligence" was first prescribed in the law on securities. Despite such respectful age, the revision and development of new standards took place only after 44 years - in 1977. The creators of the rules were Swiss banks that signed an agreement on a special approach to collecting customer information. The purpose of the implementation of the rules was to protect against the rigid regulation of the work of financial institutions by the state.

Over time, the principles have been disseminated by bankers and in consulting business. The basis of the Agreement was used to analyze the work of the enterprise from a legal point of view, as well as from the position of analysts in the financial sector and auditors.

In the Russian Federation there are no laws or acts that would regulate the Due Diligence process. In each case, the decision on the level of detail, the depth of the study and other parameters is made individually. But the lack of laws does not frighten the participants of the investment sphere.

The principles of Due Diligence are actively used to obtain detailed information about the partner when making a transaction. According to experts, in a few years the level of popularity of DUED will be the same as abroad.

When is it necessary to hold a Duediligence?

The practice of Due Diligence is applied by an investor who plans to acquire a company or put money into it. In the process of implementing a major transaction, it is important to have complete information about the real price, as well as about the consequences that may occur in the case of a transaction. The information collected in the future can be used in the issuance of shares or in the process of creating an absorption plan.

1. The company has changed status after uniting with another organization or passing the absorption.
2. The management structure has changed.
3. Loans or assistance from investors are obtained.
4. The founder of the company became another person.
5. The effectiveness of the enterprise has decreased.
6. The company's assets are arrested.
7. There is a loss of intellectual property.
8. Defined disorders when checking the staff of the FTS.
9. The competitive position of the company has decreased.

During the DUED process, the following works are held:

• Check the financial component of the enterprise to accuracy.
• Control of the relevance of the policy that the organization leads in the process of activity.
• Evaluation of the depth of the incarnation of current and future plans.
• Study of competitive advantages.

Main Task Due Diligence - Minimize the risks of entrepreneurial activity or completely protect against them. This also applies to the danger relating to the purchase of securities at an overly high price, non-fulfillment of obligations, the risk of loss of property and money. The Dew-Diligence process takes from 2-3 weeks to 12 months. It depends a lot of how big business is.

DUED process - action algorithm

The Dew-Diligence procedure includes five stages, on each of which an intermediate result is issued:

1. Tax DUED - Checking the Company's activities in the financial and economic sector over the past 3 years. Work is performed in order to conclude a real state of the company at the time of verification, as well as determine the risks in the tax sector. In the process of tax Dew-Diligence, the company's reporting (on accounting and tax deductions) is analyzed, the activities and means of the organization of work are checked. The latter component includes inventory material valuesCheck financial investments, availability of receivables, the fact of payment of mandatory payments, as well as checking partners. In the completion of the work, a report is created, which contains a description of the risks and advice to eliminate problems.
2. Operational Dew-Diligence - implies an inspection of the constituent documentation of the enterprise. At this stage, the structure of the company is specified, the presence and number of rights of shares (property and non-property) and risk levels. When detecting a risk to business, options for eliminating the problem are offered. When analyzing the structure of the organization, the correctness of the registration of issued securities, as well as carried out with their participation of operations, is monitored. Including the availability and sufficiency of payments for shares holders. After completing this part, the dee diligence is issued.
3. Legal Dued - verification of guidelines for all assets of the organization. The task is to determine the number and species, as well as the risk of disposal. It also offers advice on preserving and ensuring the safety of the assets available. At this stage, agreements are being studied with partners, loan agreements for real estate (from the position of encumbrance), paper on a trademark, as well as guidelines. The risk of potential problems associated with business partners or controlling government structures is also evaluated. Mandatory component of the Legal Due Diligence - Verification of the enterprise for various bases, including the EGRUL, Spark, you and others. At the final stage, the Company's owner is transferred to the conclusion where risks in the legal sector are indicated, and advice on their decline is given.
4. Marketing Dew-Diligence - the process during which the market situation is estimated, main trends and products from the position of creating market competition. In addition, the policy is being studied by the organization in the field of marketing and current risks, followed by reflection in the reporting.
5. Financial Dued is the study of the main financial parameters of the enterprise, followed by their analysis. The purpose of the verification is to assess the prospects for the organization, including in the development area. In the process of verification, the company's assessment is performed (from the market position), the level of financial stability is determined, the coefficients of business activity and solvency are calculated. In conclusion, the results of the work performed are provided.

Who does work on holding Due Diligence?

As a rule, specialists in the legal and financial sector are involved in the execution of DUED, as well as experienced auditors. It is worth noting that these are only recommendations, therefore other experts may be as part of the group. To save money for Dew-Diligence, employees of their own organizations can be involved, which are experts in one or another sphere.

The advantages of this approach are obvious:

• Reducing the cost of procedure.
• The opportunity to learn the enterprise and its prospects, assess the risks and receive recommendations for their exception.
• Improving the skills of own employees to assess the activities of the organization.

Minuses:

1. The need to distract people from the fulfillment of the main tasks.
2. The ability to verify the activities of another company, if it leads a similar type of activity.
3. Risks of a biased evaluation of facts.

Conducting Dued on its own forces is relevant for small enterprises, because, if necessary, an integrated analysis of a large organization requires attracting experts and greater time expenses. That is why banking institutions and investors with experience who have their own specialists at its disposal, still attract people from.

Due Diligence services provide many enterprises. It may be a consulting, regional or international company. Pros of cooperation with such organizations is that the customer receives a full package of services and may not worry about the quality of work performed.

There is an alternative way - use the services of experts in their field from various enterprises. But there is a drawback - difficulties with the coordination of time and the invitation process itself. In addition, total expenditures are higher. This is due to the fact that the team of specialists includes representatives of many areas (legal, financial, appreciable, technical, and so on).

How much will the service cost?

The cost of Due Diligence largely depends on the pricing policy that such or another consulting firm is leading. For example, in Russia, prices for services differ in wide limits. In any case, Dew-Diligence is an expensive procedure, because it requires the involvement of experts in its sector, responsibility and carrying out large amounts of work.

The largest price of services in consulting firms included in the top 4. But with such organizations it is worth working, because in addition to the accurate assessment of the enterprise, the Customer receives the confidence of international counterparties. In addition, large companies are verified by a single technique, which guarantees the correct reflection of all necessary information in the report.

Payment of specialists hourly. On average, in an hour, the tax consultant receives 6,000 rubles, the expert in the financial or legal sphere is 5 000 r., Accountant - 3 000 r., And an assistant - 2 000 r. To accurately determine the costs, the executive company must have information about the activities of the organization's verifiable and the work goal. The required amount of information is collected in the process of communicating with the customer. On average, the price of the service is 70 - 140 thousand rubles.

Company info KSK Group

CSC Group leads its history since 1994. From the moment of founding and to date, the company is among the leaders of the consulting services market in the field of audit, taxes, rights, assessments and management consulting. For 20 years of work, more than 2000 projects were implemented for the largest Russian companies.

KSK Group offers a comprehensive and practical solution to the most urgent tasks facing financial and general Directors Companies and business owners. An individual approach, a deep understanding of the needs and objectives of customers in combination with practical knowledge make it possible to solve these tasks as efficiently as possible.

The KSK team team is a team of more than 350 specialists who have a unique experience in implementing projects for both medium and largest Russian corporations.

Currently, CSC Group offers a full range of services and business solutions:

• audit on Russian and international standards;
• tax I. legal consulting;
• outsourcing and automation of business processes;
• financing decisions;
• marketing solutions and development of a business strategy;
• management and personnel consulting;
• evaluation and expertise;
• support of transactions with capital;
• Due-Diligence.

Due Diligence yesterday was a fashionable word, but recently the concept of entrepreneurs has been firmly firmly. What does it mean?

This term is translated from English as "due conscientiousness." Wit down Due Diligence in the fact that before accepting an important strategic decision on investing money Or buying a business to show the necessary prudence, in order not to buy a "cat in a bag." To avoid adverse consequences and reasonably dispose of its free money, it is necessary to conduct a comprehensive analysis of the financial and economic activities of the investment facility. It is this check and called Due Diligence.

Recently, especially in the conditions of the changed economic realities, this service is becoming increasingly popular. First of all, it is due to the increase in the number of potential business sellers - many of them understand that it is more profitable to sell the business that has become low-acquisitive than attempts to return to the previous level of profitability. Also in new realities, many owners in order to get out of a difficult financial and economic situation are looking for investors who could invest free money in their business. Transactions of both kinds, as a rule, precede Due Diligence.

In the event that Due Diligence is conducted by a professional consultant, most often by the customer of such a service is a potential strategic investor, intending to explore the object of the upcoming investment to make a final decision on the possibility of investing.

Also the customer can perform commercial BankWho wishes to study how reliable the potential borrower is. In addition, Due Diligence is often held before making M & A transactions, that is, mergers and acquisitions, in order to establish a real picture of the activities of the object of the transaction.

Significantly less often as customers are the owners of the company. As a rule, this happens before selling a business when you need to evaluate the real state of affairs. The purpose of such customers is the formation of a real commercial offer, which they subsequently submit to potential investors. In our practice there was a case when the business owner ordered a pre-sale Due Diligence consultant who later also carried out a range of services related to the search for the investor, accompanied Due Diligence, conducted by representatives of a potential investor, provided consultations in the formation of an electronic Data Room (a special portal on which Posted copies of all documents that may be interested in counterparty), and also participated in the structuring of an investment transaction.

Also among customers can be found intermediaries in the sale and sale of assets - they are conducted by Due Diligence in order to minimize their own liability (realtors, commercial representatives, etc.)

The following risks can be identified and rated within the Due Diligence.

• risks of the corporate structure;
• risks Owliness balance value assets;
• legal and tax risks;
• the risks of the loss of assets and the risks of attracting to various types of responsibility.
• risks associated with labor resources. It means here as the risks of paying the so-called "golden parachutes" and risks associated with possible labor disputes.

According to the results of the Due Diligence consultant, as a rule, a report containing a risk card and a plan for their minimization, as well as recommendations on the structuring of the transaction are drawn up.

The need for Due Diligence follows from the main rule of due diligence: warned - it means armed. Illustrate this rule can specific example Detecting quite significant risk during Due Diligence and subsequently structuring a transaction in order to minimize the revealed risk for the investor.

During the audit, it was found that the company A, the seller of the property, which was acquired by the verified company B, by the time of the inspection was recognized by bankrupt and the observation procedure was introduced for it. The total value of the acquired property relating to the main production facilities of the checked company B, amounted to more than 200 million rubles.

The risk was that such a deal could be invalid in connection with the bankruptcy of the counterparty (paragraph 1 of Art. 61.2 of the Federal Law of the Russian Federation "" dated October 26, 2002 No. 127-ФЗ; more - bankruptcy law).

Thus, the transaction committed by the debtor within one year before the adoption of a statement about the recognition of bankrupt or after the adoption of this statement may be recognized as an arbitration court invalid with an unequal counter fulfillment of obligations of the other party of the transaction, including in case the price of this transaction and (or ) Other conditions are essential for the worst for the debtor side differ from the price and (or) other conditions under which similar transactions are made in comparable circumstances (suspicious transaction).

Under the unequal counter execution of obligations will be recognized, in particular, any transfer of property or other fulfillment of obligations if the market value of the property transferred to the debtor or the fulfillment of obligations implemented by him significantly exceeds the cost of the oncoming fulfillment of obligations determined with the conditions and circumstances of such a counter fulfillment of obligations.

In addition, the transaction committed by the debtor in order to harm the property rights of creditors, can be recognized as an arbitration court invalid if such a transaction was committed within three years before accepting an application for the recognition of the debtor bankrupt or after the adoption of this statement and as a result of its commitment was caused Harm to property rights of creditors and if another part of the transaction knew about the specified purpose of the debtor at the time of the transaction (suspicious transaction). It is assumed that the other party knew about it if she was recognized as an interested person or if she knew or had to know about the infringement of the interests of the debtor's creditors, or on signs of insolvency or deficiency of the debtor's property ().

The purpose of causing harm to property rights of creditors is assumed if the debtor responded at the time of the transaction, the debtor responded a sign of insolvency or deficiency and the deal was made free or in relation to the interested person, or aimed at paying a share (share) in the debtor's property. Founder In connection with the exit from the Founders (participants) of the debtor, or committed in the presence of one of the following conditions:

• the cost of the transaction transferred as a result of the transaction or several interrelated property transactions is either received obligations and (or) responsibilities are 20 and more percent of the balance sheet value of the debtor's assets, and for credit organization - 10 and more percent of the book value of the debtor's assets;
• the debtor changed his place of residence or the location without notice of creditors immediately before making a transaction or after its commission, or hid his property, or destroyed or distorted (including due to violation of the regulations), the right-point documents, documents accounting and (or) other reporting or accounting documents;
• after making a transaction for the transfer of property, the debtor continued to exercise and (or) possession of this property or to instruct his owner to determine the fate of this property

Shortly before the conclusion of contracts for sale in relation to the property acquired by the company's checked company, its independent assessment was carried out. At the same time, the cost of property in the sale and purchase agreement between companies A and B was about two times lower than the cost specified in the appraisers reports.

In addition, with Due Diligence it was also found that all transactions for the acquisition of this property were committed between interdependent personswho could not not be aware of the submission of the seller on the transaction of the application for recognition by bankrupt.

The law defines the consequences of recognition of the transaction invalid ():

1

Everything that was transferred to the debtor or other person at the expense of the debtor or on the execution of obligations to the debtor, as well as seized by the debtor on the transaction, recognized as invalid in accordance with this Head, is subject to return to the competitive mass. In case of the impossibility of returning property into the competitive mass in kind, the acquirer must reimburse the actual value of this property at the time of its acquisition, as well as losses caused by the subsequent change in the value of the property, in accordance with the provisions of the Civil Code of the Russian Federation on obligations arising from unjurdious enrichment.

2

Lenders and other persons who are transferred to the property or in front of which the debtor performed commitments or responsibilities for a transaction recognized invalid, in the event of a return to the competitive mass of the property received for an invalid transaction acquire the right to demand for the debtor, which is subject to satisfaction within the bankruptcy case.

3

In case of recognition on the basis of the invalid actions of the debtor on payment of money, the transfer of things or other fulfillment of the obligation, as well as to complete the transaction of the debtor, aimed at terminating the obligation (by credit the oncoming homogeneous requirement, to provide an explicit or other way), the debtor's obligation to the relevant lender It is considered to be an invalid transaction from the moment. At the same time, the right of the creditor's claim for this obligation to the debtor is considered existing independently of this transaction.

According to the results of the inspection, the consultant was made the following conclusion. There is a risk of recognition in judicial order Properties for the acquisition of real estate and equipment are invalid with the use of the consequences provided for in the event that the execution price of the transaction between the companies A and B is significantly different from market prices and as a result of this transaction caused damage to bankrupt company creditors, the company A, which was the seller According to the disputed transaction under consideration.

The potential investor appreciated the revealed risk of loss of property in the amount of about 200 million rubles. as significant because it was about the possibility of losing the main production Funds B. Company

This information was paid due attention when structuring the transaction: from the company B, in respect of which Due Diligence was held, the verification customer received relevant guarantees and assurances.

It should be borne in mind that the specified risk was not the only one identified during the verification of a specific enterprise: the risks of taxes were also found, in addition, part of assets, such as receivables, were reassessing.

As a result, the client, by paying about 2 million rubles for the inspection, with estimates spent the tools spent, since possible losses from the investment of funds identified by the results of the inspection significantly exceeded the costs of its conduct.

On time, the qualitative and professional Due Diligence made it possible to minimize the risks of the investor, although he reduced the investment attractiveness of the cash investment facility.

Ekaterina Lakatosh,
leading Legal Counsel of the Department of Tax Security of International Planning and Development of CSC Group

Investments in merging or absorption of various kinds of business or companies are common in the field of investment. The primary task is to adequate argumentation of the effectiveness of this kind of infusion, which should be supported by the full, maximum reliable and absolutely objective information about the investment.

How to analyze the activities of the firm from all sides? What translation is the term Due Diligence?

If the company is as a potential financing object, it is required to determine its market position, the state of financial indicators, equipped with production facilities and relationships with counterparties or partners. To this end, the DUE DILIGENCE procedure is carried out. Translation from English is interpreted as "proper diligence". In Russian pronounced as "Dew Diligence". This concept is interpreted in different ways. Above the most frequently used description of the term was presented.

Decoding previously presented concept

Initially, it is worth answering the question: "Due Diligence - what is it?" In essence, this is a comprehensive analysis of the activities of the company, in particular the state of its financial affairs and the market position occupied by it. Analysis information base is internal documentation and information received from competitors.

Why do you need this procedure?

Conducting DUE Diligence is carried out for the following purposes:

1. Authentication of information on finance and other indicators of the Company's performance.
2. The search for argue evidence that is justifying the implementation of the activities of the developed business plan.
3. Evaluation of the possibility of the implementation of the tactical and strategic goals of the company.
4. Checking compliance of the documentation of the enterprise law established rules Its design, as well as internal standards.
5. Analysis of the correctness and timeliness of the formation of tax, statistical and other reports.
6. Determination of the enterprise's competitiveness within its target market segment.
7. Estimates of the degree of competence of the Company's governing staff regarding the ability to implement strategic plans.

All of the above will allow again to answer the question: "Due Diligence - what is it?" The entire list of substantiation of the feasibility of this analysis is another confirmation of the need and relevance of its holding in Russian firms.

Practical application of the DUE Diligence Procedure

There is a list of situations at which this method of analysis should be carried out by the obligatory initial stage, namely:

• merging or business absorption;
• acquisition of shares or share of the company;
• buying real estate;
• institution of new arrivals;
• provision of a loan;
• in particular sponsorship or gratuitous;
• other operations of the financial and commercial focus, in which you need to provide genuine data on the object of the transaction, or about the company's financed, or about the investigative of the depositor, sponsor or buyer, etc.

The feasibility of Due Diligence Company

In the implementation of this comprehensive study, a special project team, which consists of professional lawyers, appraisers, auditors, is engaged in collecting all sorts of information about the object analyzed and reporting, especially financial.

You can select several cases that are relevant to Due Diligence. Translation of this term has already been reviewed earlier, but it will not be necessary to recall that this is a comprehensive analysis of the authenticity of the data provided by the Company.

What business must be used to apply this study?

To the above facts include several firms requiring Due Diligence:

1. The so-called "companies for sowing" (SEED). Basically, they act as projects and business ideas requiring investment for a more in-depth study or development of test units.
2. Newly minted firms (Start Up). Involving investment is necessary for implementation and subsequently for the start of implementation.
3. Companies at the initial stage (Early Stage), that is, there is already an implementation of a trial batch of finished products. As a rule, they do not have profits and require capital investments in the final stage of research and development.
4. Firms settled at the Expansion Stage (Expansion). There is a need to attract investments for the development of new sales markets, an increase in production, conducting research in marketing research, production capacity and working units.
5. Companies that are at the BRIDGE Financial (Bridge Financial). There is a need for financing for the transformation of organizational and legal form, namely private entrepreneurship in which tries to carry out the procedure for registering its shares on the stock exchange.
6. Existing firms attracting investments to buy them managers of finished business or existing production (Management Buy-Out).
7. Already existing companies whose managers require funding to buy firms from the (Management Buy-in).
8. Firms at the coup stage (Turnaround). They need investment to strengthen their financial condition.

From the listed facts it becomes clear that it can give Due Diligence, what is this in general understanding and is it worth applying it to a specific company.

The species aspect of the procedure under consideration

The verification with respect to the legality of all constituent documents and the correctness of the formation of authorized capital produces Due Diligence, the legal aspect of which in this study is prevailing.

This includes checking in the following areas:

1. All times in concerning the property aspect of the selling business, more precisely, the availability of appropriate rights. The probability of risks associated with its challenge by third parties.
2. Legal and existing legal reinforcement of perfect transactions within the firm that was put up for sale. Evaluation of the possibility of complaints about these commercial relations.
3. The legal side of labor relations with employees, in particular, the correctness of the design of employment contracts, acceptance procedures, distribution of material liability, etc. Check for the presence of risks of claims dismissed employees in improperly.
4. Compliance of the actions of the firm with the requirements of corporate legislation, namely: the legality of the sale of shares or shares of other commercial structures. Assessment of the admissibility of claims of shareholders and equity owners regarding violation of relevant transactions.

What justifies the profitability of this study?

Analysis is equally important in the engineering aspect, referred to as the technical Due Diligence.

The usefulness of this procedure is supported by the following moments:

1. The owner or investor receives information acquired from the professional research of the technical condition of the verifiable property, the presence of defects and the existing opportunity to eliminate them or improve the acceptable state of affairs. At the same time, all engineering documentation is being analyzed.
2. There is a possibility of operating with reliable data during the relevant settlements aimed at the economic validity of investment, if the repair or reconstruction of the object under consideration is required.
3. All information received during the study is necessarily useful during negotiations on the price of the object. It will be confirming, as it is based on the professional conclusion of experts.

Real estate of this study by profiling companies

The Due Diligence service will help to obtain an objective view of a group of specialists at the expense of their attraction from. This will save funds to retraining your own employees and avoid bias the assessment of the object under consideration for the financial injection.

The investor or the owner has at its disposal comprehensive information on areas such as accounting, personnel and tax accounting, as well as legal and corporate expertise. All this will be able to organize the legal Due Diligence.

Landmark when choosing a firm specializing in this procedure

The company that does Due Diligence must meet the following criteria:

• the presence of many years of experience in the relevant field of activity;
• high rating and flattering reviews about previously conducted procedures;
• exceptionally highly qualified experts carrying out a comprehensive study;
• the ability to analyze a specific investment subject;
• the principle of efficiency in the process of research, achieved through the professionalism of the expert group and the standardization of the procedure of legal DUE DILIGENCE;
• the presence of close mutual cooperation of all specialists.

Are there interrelated stages of comprehensive analysis?

This procedure can be divided into three stages:

1. Remote request for all necessary documentation from a checked firm or direct departure to an analyzed object. In the case of the acquisition of shares or shares of a certain company, the expert group works in place. The justification for this option is the possibility of an operational settlement of identified controversial moments.
2. The next stage is the detailed study of the collected intrafyrna data. If additional information is required, they are received from outside, in particular from unified state registers legal entities Or rights to real estate, or plug in licensing authorities.
3. At the final stage, the expert group forms a single written report on the asset, which submitted sections general Information firms analyzed areas, possible risks and paths of their most efficient elimination.

Of the three stages specified earlier, you can formulate a detailed answer to the question: "Due Diligence - what is it?" Thus, this procedure will allow for the shortest possible time to obtain an argumental response to the feasibility of financial investments in the planned object. It is also able to identify ways to improve both the technical and legal and financial state of the company.

Due Diligence can be described as one of the fundamental stages of buying assets that helps the investor to form a complete picture of possible risks at the time of assigning property and future crisis situationswhich can manifest after the conclusion of the transaction. This procedure is aimed at checking the legality of all activities, as well as the commercial attractiveness of a potential transaction or an investment facility.

Basic concepts

The Due Diligence Procedure (Diligence Diligence) is the procedure for forming an objective view of an investment object (OI).

In relation to business activities, the term Due Diligence means a system of analytical and operational activities aimed at a comprehensive verification of the legality and commercial attractiveness of the planned transaction, investment project.

Initially, Dew Diligence came to a consulting business from banking practice and, in general, meant a system for collecting and analyzing information about potential or existing clients and partners collected by banks in order to protect their property from possible damage, incl. Reputation of the bank.

The foundations of Due Diligence were laid in Switzerland, which is associated with the historically established practice to keep assets in Swiss banks.

Dew Diligence is a system procedure for buying a business. Dew Diligence collects and analyzes information, both for the buyer and for the seller to determine or not the proposed transaction. Received information is related to all aspects of the acquired business.

Dew Diligence takes into account both quantitative indicators and financial data and high-quality indicators, such as an assessment of existing management, internal processes and procedures, licenses in stock, location and rights to occupied premises.

The concept of "Diil Diligence" was first included in general use after the adoption of the US Securities Act in 1933. The law ensures the protection of brokers in the disclosure of investors of commercial information on the purchased securities.

If during the procedure of the Diligence of the company, whose shares are sold on stock marketBrokers provided an investor information, they are not responsible for failure to provide information that could not be disclosed in the process of research.

The term "legal audit" only partially reflects the essence of Diligence, because a thorough examination of the proposed transaction in practice also implies:

• economic Justification
• marketing research
• analysis of documents and information on their accuracy
• conducting a set of operational intelligence activities, etc.

The depth of the test depends exclusively from the wishes of the client's goals.

Now this procedure is widely applied in the acquisition-absorption transactions.

Why do this procedure need

Evaluation of the benefits and obligations of the alleged transaction is carried out by analyzing all aspects of the past, present and projected future purchased business and identifying any possible risks. The lack of due verification may be the cause of bad financial results after the change of the owner, the cause of lawsuits, tax and financial inspections and other more unpleasant consequences. It is known that reducing the welfare of companies that have acquired a business, frequent judicial claims in their respect - is an inadequately conducted procedure "Dew Diligence".

The Diligence procedure begins from the moment that the buyer is just starting to plan a possible purchase (absorption) of an investment object. The study of the company's activity begins, the search for any information about the company is usually through official sources (Internet sites, publications in the press). Search, tracking and analysis of information is carried out in order to determine the cost of the company and interest in its acquisition.

The duration of the Dew Diligence procedure takes from several weeks to a year, depending on the structure and size of the business.

The costs associated with the hiring of appraisers, lawyers, auditors, financial analysts and other specialists in no way should be the reason for refusing to refer to the qualitative conduct of Diligence, since such savings can lead to a loss of larger resources.

Thus, the purpose of the procedure of Dew Diligence is to avoid or maximize the existing entrepreneurial risks (economic, legal, tax, political, marketing), in particular:

• the risk of acquiring an enterprise (stake in shares) at an inflated value;
• the risk of non-fulfillment of obligations by the debtor's enterprise;
• risk of loss of property, money;
• risk of harm (losses), incl. intangible assets, such as business reputation;
• the risk of initiating litigation and their adverse effects;
• risk of imposing arrest on property or application of other interim measures;
• the risk of recognition of the transaction is invalid;
• risk of imposing collection on property, securities (shares);
• risk of attracting tax, administrative or criminal liability;
• the risk of corporate conflicts (seizure, absorption, litigation);
• risk of loss of intellectual property (trademark, industrial design, invention, know-how, commercial idea, business plan, etc.);
• political risks and risk of loss of administrative resources (change in legislation, the change of an official, on which the success or stability of the relevant project, criminal prosecution);
• risk of unscrupulous actions of competitors (conspiracy with counterparties, initiation of "customized" tax, operational inspections, pricing policy, lobbying of interests, etc.);
• the risk of non-treatment or loss of appropriate permits, licenses, coordination, etc., on which the project depends on, transaction, etc.

Both parties are interested in the objective and competent conduct of these procedures: both an investor (buyer) and a party attractive investment (seller).

What analysts do

The task of the procedure of Dew Diligence - the formation of an independent objective view:

• On the market value of the shares of the investment object (OI);
• About the real financial condition of OI;
• On risks that may worsen the financial condition of OI.

Holding independent evaluation The provisions of the Affairs are the necessary procedure when changing the owner of the object, since it allows you to establish a certain confidence between the parties by the transaction, based on the conclusions and recommendations of experts, find the necessary compromises to overcome the possible conflict of interest.

In the process of conducting the procedure, Diligence is taken into account both quantitative indicators and financial data and qualitative indicators: an assessment of existing management, internal processes and procedures, license costs, location and rights to real estate facilities.

In the process of holding Due Diligence, work is carried out, which can be divided into three interrelated parts:

o Assessment of the cost of a package of shares (value of the property complex, business value).

o assessment of the accounting and accountability and financial reliability system and financial analysis; assessment of tax risks;

o Legal assessment of risks from commitments and perfect transactions.

At the same time, appraisers, auditors and lawyers work in close cooperation, since complete information on the transaction can sometimes be given by joint efforts.

Restrictions and assumptions at Diligence.

When conducting Diligence, a consultant comes from the following assumptions:

1. It is assumed the absence of any hidden factors, directly or indirectly affecting its results, and for the purposes of this report under such factors it is understood as circumstances, information about which is intentionally or unimusedly hide employees of the company, affiliates with it, or circumstances whose information about which Destroyed or not available for familiarization for other reasons.
2. Information about the company used during the study is taken for reliable and exhaustive, and the owners of its sources are responsible for compliance with the reality and completeness of such information.
3. Information about the company does not contain confidential information that make up the service, commercial, state, personal or other secrecy protected by law.
4. Information on the rights of assets of the Company is assumed to be fully relevant to the legislation Russian Federation and other regulatory acts, with the exception of cases when in this report directly indicated to the opposite.

When conducting Diligence, a consultant establishes the following limitations and limits to the application of the result obtained:

1. The consultant is not imputed to the duty to search for hidden factors, directly or indirectly affect the results of the study.
2. Information about the company can only be obtained voluntarily from its employees or persons affiliated with the company, as well as from open sources of information.
3. Information about the company may not contain confidential information that constitutes a service, commercial, state, personal or other secret secretly, while the consultant may not know that it has been limited in access to such information on the indicated grounds.
4. During the study, data on the facts that took place either could occur during the time coming beyond the timing of the Diligence period established by the technical task of the Diligence period are cases when they are performed simultaneously. the following conditions: (a) Information on such facts has become aware of the consultant and (b) in the consultant's opinion, information on such facts is essential and must be communicated to the customer's attention.
5. The results of the study are valid exclusively at the date, as of which Diligence Diligence is carried out, except when the present report is directly indicated for the opposite.
6. The results of the study cannot be used otherwise than in accordance with the objectives and objectives set forth in the contract between the customer and the consultant and the technical specifications for it.
7. The results of the study contained in this report, including the conclusions and the recommendations based on them relate to the professional opinion of the consultant specialists formed on the basis of special knowledge in the field of jurisprudence and the experience of such works.
8. The consultant is not responsible for decisions that have been adopted by the Customer based on the information on the results of the study, as well as the consequences that arose in connection with the ignoring research results.
9. The consultant is not charged with the need to proof existing or missing companies on its assets, as well as the rights of third parties on the company's assets, and obligations available.
10. A consultant using information about the company does not certify the facts that are contained in such information.

Basic rules for carrying out the procedure of Diligent.

Creating a qualified team "Dew Diligence"

1. Choosing a professional consultant team

Usually, the Buyer attracts consultants and experts for the procedure "Dew Diligence". At a minimum, the Dew Diligence team should include appraisal, legal and financial / accounting staff. It can also include economists, engineers, security specialists.

In Russia, the mergers and acquisitions market are quite specific. Companies - Applicants for sale (absorption) are, as a rule, companies specializing in specific areas of the economy: oil and gas, metallurgy, telecommunications. "Dew Diligence" such companies necessarily require special knowledge (technical, economic, etc.).

Than a qualified team "Dew Diligence", the more adequate and accurate will be the future report, and, accordingly, the less the problems with which the buyer may encounter in the future.

2. Statement of Taxation

Good procedure Dew Diligence should begin with the preparation of an exhaustive detailed technical task for conducting the procedure of Diligence.

The technical task for the procedure of Dew Diligence should be drawn up by an investor - the customer of works with the direct participation of the Contractor - team Dew Diligens. This is necessary because the investor sometimes there are questions related exclusively with doing business, and only an investor knows exactly what he expects from the company acquired.

The technical task should be covered by the most important areas of the outlined transaction (the composition of assets, the price, the history of the Company's acquisition, debt, owners, etc.).

Consultants will try to ask only those documents that should be available from this type of company. Sellers remain dissatisfied when the buyer requests information that requires the seller to prepare new documentation.

Possible problem

In practice, it is difficult to focus all points and questions in the first control list, and there is a need for additional queries. It annoys the seller and delays the process. To avoid this problem, before preparing the questionnaire, the team members Dew Diligence are trying to conduct a preliminary study in order to accurately know the specifics of the company's activities and possible "pitfalls".

3. Negotiations and interviews with the seller

Investor should be obtained by information that is not available in the documents, during the negotiations and interviews with officers Seller. This is an important part of Diligence. Such negotiations should be held in a friendly and unobtrusive atmosphere. At the same time, we proceed from understanding that we are talking about a friendly purchase (absorption).

Possible problem

In practice, there is a situation where the seller is not ready to work (read - let the enterprise) none other than the appraisers. The argument is too many important information can receive lawyers and auditors that will be allowed to all enterprise documentation. Subsequently, this information can be used against the enterprise and friendly absorption - the purchase can turn into unfriendly.

There are no advice here, everything is solved by the level of interest of the parties and their relationship.

4. Preparation of documents and place of work with themselves

To facilitate work and saving time it is very important to have all the necessary documents in one place in a special room. It is desirable that such a room is located in the seller. This facilitates the search for documents, makes it possible to ask the staff questions and conduct negotiations, and also allows the Seller anyway to control the process of working with documents.

The room must be as equipped with all the necessary equipment: telephone, fax, printer, copy machine, Internet. It is important that every member of the team Dew Diligence has constant access to this room at any time.

5. Required and sufficient information (documentation)

No less important in the Diligence Diligence procedure is the inspection of intrafirm operations: any contracts concluded by the Company (pledges, loans, contracts, lease and other civil law contracts), including any intent protocols, cash transfers, intended public accommodation Shares (IPO).

Consultant It is important to determine which information is necessary for verification, and from what level can be neglected by the analyzed data.

A thorough analysis of judicial risks regarding the Company is needed, verification of rights to intellectual property, antitrust law issues, environmental protection.

At the same time, the legal adviser must determine which judicial claims are essential, which, of course, is relative. Those. A million dollar suit will be small in the context of a transaction by $ 1 billion, and vice versa. Many international law companies consider a reasonable threshold of existence of 250 thousand dollars. In the conditions of the Russian market, analysts consider the threshold of existence of 100 thousand dollars.

Some claims deserve close attention, regardless of their sum. For example, a claim for product quality will require special attention. In assessing the costs of potential risks, companies should also consider an extrajudicial settlement option.

6. Obtaining confirmations from government agencies

To complete the status of the company, first of all, it is necessary to make sure that it was created in accordance with the law and continues to exist.

For this, authorized (constituent) documents of the company are studied and any changes to them, for example, the change of the name. Constituent documents must be checked in the original or in the form of notarized copies. It is necessary to obtain official confirmation from the registering authority that the company is registered properly, all available changes have been properly adopted and registered.

It is advisable to receive confirmation of the statistical authorities, the Tax Committee, the Land Committee, the Real Estate Center, the Financial Supervision Agency, as well as from licensor bodies.

To obtain confirmation of information from government agencies, it is necessary to have a power of attorney from the seller to receive such data.

For the complete completion of this stage, the Diligence procedure must check the current licenses for the implementation of the Company's activities, relevant registration certificates as a taxpayer and registration in statistical authorities, certificates of state registration of share emissions, reports on the results of securities, documents confirming the payment authorized capital.

Preparing of report

After studying and analyzing all the information, the interview is drawn up a report on the procedure of Diligence Diligence. Since the work takes part specialists of three directions - appraisers, lawyers and auditors, 3 reports are usually prepared. For the convenience of perception of information, the most significant information is reduced to a separate presentation.

The presentation of the results of the work of specialists who worked on Dew Diligence, allows an investor who makes a purchase decision, focus on the main thing. Investigator's trustees of the investor can analyze in detail.

The report is written in writing, in accordance with applicable federal legislation and standards. Presentation - in an electron and paper form.

Common problems arising from the procedure "Dew Diligence".

One of the most frequent problems is a situation where the seller refuses to submit the requested documentation, does not contribute to its provision, directs the buyer to employees who do not know the answers to questions. This speaks of the fears that the seller is experiencing in connection with the provision of information to consultants. Ultimately, this is a matter of non-infractions between the seller and the buyer.

In the course of the whole process, the Buyer should consider stress, which arises when the interaction of his staff with the seller. Procedure Dew Diligence disrupts the usual business schedule and can be regarded by the seller as an unreasonable suspicion of the buyer. The seller can fear the negative consequences for doing business and its future selling to other persons if the alleged transaction will not take place. Some potential transactions broke out due to the rigors of the Dewgens Diligence procedure, causing dislike at the parties.

Consultants are recommended to discuss the basic rules of Diligence in the negotiation process between the buyer and the seller in a letter or an agreement on intent. In such a letter, the time required to hold Diligent, the ability to copy documents, the list of documents to which access should be organized are.

It is very important to enlist the obligation of the seller to promote Diligence in conducting Diligence and guarantee access to personnel, documents, office room. The seller always fears the dissemination of information and is concerned about the preservation of confidentiality, so the most acceptable option is the conclusion of a separate confidentiality agreement.

Dew Diligence as a mandatory stage of the investment process.

Currently, the need to manage the risks of its activities, improving financial management, the formation of a weighted investment policy becomes more apparent for market participants. The formation of new relationships of companies, the need to modernize the production, development of investor relations and the possibility of entering international capital markets led to the fact that the requirement of transparency of activities today is no longer a mod, but an obligatory requirement for companies that claim leading positions in their markets And for less large developing companies. The principle of "knowing your partner" is a fundamental in the selection of a form of business partnership and contractual conditions for the implementation of the project or transaction.

The Bank, which provides a Credit Customer, an investor, intending to acquire a business, a firm that makes a trading contract - they all want to be confident in the reliability and profitability of the transaction. Such confidence can only be based on full, reliable and objective information on the financial condition, the legal status and the market position of the contracting company. For collecting and analyzing the necessary information, the interested party resorts to a special procedure for a comprehensive check, which received the name Due Diligence in world practice.

Due Diligence - (in the literal translation from English - ensuring due conscientiousness) is a system or a complex of analytical and operational activities aimed at a comprehensive verification of the legality and commercial attractiveness of the planned transaction, an investment project, procedures, etc. In order to avoid or maximize the existing entrepreneurial risks (legal, tax, political, marketing, etc.).

For the first time, the concept of Due Diligence appeared in the US legislation on securities in 1933. At the same time, the term itself was not directly defined, because, as noted by the courts of states, it is impossible to establish a single amount of requirements for Due Diligence of various companies. Modern standards Due Diligence were developed in Switzerland in the 1970s in order to avoid hard state regulation and control over the activities of banks. The SWISS Bank "SWISS Bank" S Due Diligence Agreement), signed in 1977, established a single approach to the collection of customer information when opening accounts and in the process of their service. In the future principles, the following by the Swiss Bank Association, became Use all participants in the investment process.

So, you will need Due Diligence if you or your company:

• want to sell your business or buy ready-made;
• intend to merge, or the absorption of companies;
• intend to create a joint venture;
• are you going to contact banks or financial organizations for a loan;
• want to truthfully show your consistency and solidity to a potential partner or investor;
• you wish to check the reliability and solvency of your counterparty.

At present, investors are currently treated for Due Diligence in order to assess the diverse risks associated with investing, as a rule, when solving the issue of buying a share in business or business project as a whole.

Conditionally, the study of Due Diligence can be divided into several parts that differ from each other both by goals and according to methods. However, all these elements are extremely necessary for a holistic and comprehensive study of the company's activities and financial condition.

Typically, the Diligence Diligence procedure is carried out by the Forces of Three Units: Financial Analysts and Appraisers; Auditors; Lawyers.

The work of financial analysts and appraisers suggests:

• analysis of financial indicators of business, its prospects,
• evaluation of the dynamics of financial performance of business;
• assessment of property, rights and commitments sold in business;
• assessment of the state of fixed assets: their suitability for production, wear, need to update, the need for basic tools for business (and prospects for the sale of unnecessary fixed assets),
• evaluation of the financial scheme of the business, the circle of legal entities whose activities are involved in the formation of financial financial indicators.

Task auditors - to conduct financial inspection of the enterprise activities, which includes:

• analysis of the structure of revenue and cost of the company for the analyzed period, analysis of the main indicators of the company,
• evaluation of the internal control system in terms of document management relating to the company's expenses, selective analysis of the quality and completeness of documents confirming the cost of the company,
• the analysis of fixed assets: general composition, accrued wear, revaluation results,
• analysis of the company's financial investments,
• analysis of receivables,
• company stock analysis: composition, cost, dynamics, illiquidcies,
• analysis of accounts payable
• analysis of conditional obligations (fines; penalties; guarantees issued to the provision of third-party debts; indorseized bills; claims, presented companies; pledges and other material-legal burdens of the company's property),
• analysis of the completeness and reliability of accounting for assets and obligations reflected by the company's balance sheet,
• identification and generalization of all essential tax risks, unaccounted and (or) potential tax obligationscompany

Legal Part Due Diligence is an inspection:

• rights to the property sold in the composition of business, the risks of challenge the rights to the property by third parties;
• rights and obligations that are part of the business, on their existence, reality, legality, risks of challenging transactions, as a result of which the rights and obligations arose;
• labor relationship with a business team (the presence and legality of labor contracts, and agreements on material responsibility, the specificity of the dismissal of employees, the risks of the presentation of unlawfully dismissed employees of property requirements associated with their dismissal, etc.);
• compliance with corporate legislation in all areas, risk of complaints with shareholders / participants in these legal entities related to non-compliance with legislation when selling shares / share, as well as in major transactions or transactions with the interest with the property of these legal entities.

In the process of holding a Due Diligence, the project team, which includes appraisers, lawyers, and auditors visited the enterprise under study, collects information, checks the methods of drawing up financial and other reporting. Using financial analysis methods and management survey, existing and projected trends in the results, net assets and cash flows are analyzed. Thus, a considerable time is spent on working directly on the enterprise under study, both to obtain information on the activities of the enterprise and for an independent analysis of information.

It is extremely important that the company interested in holding Due Diligence and the consultant (the company conducted by Due Diligence) had a general understanding of the objectives and tasks facing the inspection. It is necessary to work out a clear joint understanding of how the client estimates the cost of the enterprise under study, as an enterprise complies with the client's strategy, and what information is based on the assumption. The consultant should also find out the seller's arguments regarding the sale and its interests in terms of profit after buying an enterprise. Answers to these questions will help determine the amount of work and, in particular, to identify areas that have exceptional importance for the client.

The results of work are based on the internal information received, legislative and internal regulatory actsData provided by competitors and partners of the company's object and are issued in the form of relevant reports.

The business features are such that significant risks affecting not only on the final price of the transaction, but also on its possible structure, can be opened only when conducting a thorough check. Attracting a consulting company that is capable of focusing on specific risks of investment and comprehensively (with the attraction of financial and legal expertise) to evaluate the company-facility, it is extremely important for investment success. Damage incurred by the company refused by Due Diligence may not be with expenses for a comprehensive check.

Investors interested (both foreign and Russian), it is necessary to consider Due Diligence as a mandatory stage of the investment process, preceding the transaction to acquire shares or assets of companies. A comprehensive check will allow you to develop risk management paths (for example, to reorganize preceding the transaction, refuse to acquire shares in favor of a transaction with assets, etc.). The objectivity and accuracy of the information presented to his attention will allow the investor to adopt an independent and optimal solution.

Tags: Procedure, Due Diligence, Dew Diligence.