What is Due Diligence?


Often when there is a transaction under process, due diligence in Australia refers to the process of ethically and adequately completing the transaction. The legal definition of due diligence reads “The care that a reasonable person exercises to avoid harm to other persons or their property”. Essentially, this just means doing your homework by investigating the company or property before purchasing.

Why is due diligence necessary?

Undergoing due diligence for any transaction or potential deal creates an allowance for a more successful transaction. This is because due diligence contributes to enriching the quality of the information provided by either party and aids in making a well-informed decision.

Due diligence for sellers

This is where the seller can provide the buyer with trust. This can also benefit the seller if they discover that their company is worth more than what was initially thought based on fair market value research.

Due diligence for buyers

This allows the buyer to get more informed and feel more confident about their expectations regarding the transaction.

Commercial Due Diligence

At TY Lawyers, we can assist you in conducting due diligence for your commercial, business services, and M&A transactions (mergers and acquisitions).

This is one of many very important elements of commercial transactions and law, and we understand how complex these endeavours can become. Therefore, we are here to cover the bases along with you in completing a fair and comprehensive deal.

What is involved in commercial due diligence?

Commercial due diligence consists of a thorough investigation of the internal business/company structure and the external analysis of the surrounding statistics. This includes but is not limited to:

  • Total market analysis
  • Sales and customer analysis
  • Upside opportunities of the company
  • Competitive landscape and company rankings
  • Analysis of the business model
  • Analysis of investment case
  • Financial performance
  • Company performance, production, suppliers, and supply chain management

How to perform due diligence?

The process of conducting due diligence is typically quite lengthy as we aim to ensure that all the bases have been covered. The due diligence process consists of:

  • Evaluating the goals of the overall project – helping to pinpoint what resources are required and what needs to be accomplished throughout the investigation.
  • Analysis of the business – the thorough investigation of all aspects of the business/company and financials.
  • Document inspection – the buyer will request specific documents from the seller to examine and gain a better understanding of the firm and value.
  • Offering formation – after all information and documents have been examined, then a value can be determined and therefore, the fair offering for negotiation.

How TY Lawyers can assist with due diligence

Our friendly and experienced team at TY Lawyers in Chatswood Australia know what it takes to conduct thorough due diligence. We will become your partner throughout the process to gain a joint perspective on what your goals are, what needs to be accomplished, and how to make this a successful transaction. This way, you can have the freedom to focus on what matters most to you. Get in contact with our amazing team to get started.

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