Due Diligence

Purpose of a Due Diligence process

The purpose of a Due Diligence is to scan possible risks and responsibilities in advance related to a Mergers and Acquisitions (M&A) transaction. In practice, Due Diligence means scanning the target company or part of it before an M&A transaction. Due Diligence process includes financial and legal part and, in most cases, also tax questions are reviewed.

Due diligence process starts normally because the buyer wants to get acquainted with the target company broadly and with due care. The buyer can’t invoke a possible defect that should have been noticed already before closing the deal. Equally the seller may want to start a due diligence process because it’s in the interest of the seller to get an objective estimate of the target company and to make sure that it has taken care of its disclosure obligation. Well carried out Due Diligence process gives the buyer and the seller a review of the target company that is drafted by professionals and that enables noticing the essential terms of the deal.

Due Diligence process from tax point of view

Tax Due Diligence can be done as a separate process but usually it’s attached to the broader financial Due Diligence process. Tax Due Diligence includes broad review of all tax questions. Due Diligence process starts normally with agreeing the timetable and the experts will send questions and request for documents. In the first negotiation the contents of the Due Diligence process and possible limitations of the process are discussed.

Tax Due Diligence process aims at ensuring that the client is aware of all essential tax issues related to the target company. The purpose is to point out the most essential tax risks and trap holes but also to note the positive issues. In practice, tax status and tax payment status of the target company are reviewed, tax risks are scanned and tax planning and improvement suggestions are presented.

Our experts will help you

The purpose of a Tax Due Diligence is to review tax issues multidimensionally and objectively. Due Diligence process requires broad and deep expertise in taxation and experience of the process. Fiscales Oy has assisted its clients in several Due Diligence processes with different scopes. We can also help effectively in Due Diligence processes with cross border situations and international aspects.

Due Diligence process includes often a comment of the value of the target company.