Conducting Due Diligence on an Indian Company

Due diligence is used to examine and assess a business opportunity. The term itself describes a general duty to apply care in any transaction, and examines details into all relevant aspects of the past, present, and predictable future of the business of a target company.

While it sounds like an impressive legal term, due diligence really translates into basic rational success factors such as “thinking things through” and “doing your homework.” The good news is – it doesn’t have to be expensive.

There are two main reasons for conducting due diligence:

When trading with an Indian company

• Verification that the business is what it appears to be
• Identify potential “deal destroyer” defects in the target and avoid a bad business transaction
• Track records in paying bills, creditworthiness and supplier worthiness

When partnering with an Indian company

• Same as above, but also including:
• Examination of legal scope for compatibility purposes
• Gain information that will be useful for valuing assets, defining representations and warranties, and/or negotiating price concessions
• Verification that the transaction complies with investment or acquisition criteria

Accordingly, due diligence examinations can in large be structured to the interested party’s specific requirements.

For more information about conducting due diligence on Indian companies, please contact our management consultants in India. 

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