Financial due diligence, also known as prudential investigation, generally refers to a series of activities in which the investor conducts on-site investigation and data analysis of all matters related to the investment in the target enterprise after reaching a preliminary cooperation intention with the target enterprise and after consensus. It is mainly in the acquisition (investment) and other capital operation activities, but the enterprise listed on the issue, will also need to carry out due diligence in advance, in order to initially understand whether the conditions for listing.
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Financial Due Diligence Main Tasks
1) Business: industry/enterprise business model, profitability model; the subject company's competitive advantages; synergies, and potential future costs and risks.
2) Financial: the authenticity and reliability of historical data; forecast financial data biased conservative? Biased optimistic? What is the basis for the forecast? Are there off-balance sheet liabilities? The soundness of the internal control system; tax issues.