The Stages Of Carrying Out Due Diligence – There are four stages in LDD, namely the signing of a confidentiality agreement (in the case of acquisitions), forming a team, preparing a due diligence request list, and examining documents. There are at least eight documents that need to be checked in the LDD process. Documents in question:

1. Documents of the company’s articles of association, in the form of a deed of establishment, minutes of shareholders’ meeting, register of shareholders, company structure, and proof of company capital injection;

2. Documents on company assets, in the form of land certificates, certificates of ownership of motorized vehicles, documents of share ownership in other companies, and other assets;

3. Agreement documents with third parties, in the form of loan agreements, cooperation agreements, agreements with shareholders, and other agreements;

4. Licensing documents and company approvals, in the form of company domicile certificates, company registration certificates, licenses granted by the government, and other documents;

5. Documents regarding company staffing issues, in the form of company regulations, social security for workers, permits for foreign workers, wages for workers, work agreements, and other documents;

6. Company insurance documents, in the form of building (building) insurance policies, vehicle policies, cooperative policies, deposited funds policies, and other insurance policies;

7. Company tax documents, in the form of company NPWP, property tax, tax payable, and other taxes;

8. Documents relating to the company’s relationship with claims and disputes inside or outside the court.

The Process of Implementing Due Diligence

Before conducting due diligence it is necessary to take a few initial steps. First, hold a general meeting with company owners, board of directors, commissioners, and or shareholders. This meeting aims to find out the outline of the company.

Then, further, discuss the purpose of the requested due diligence. It is important to determine the type of due diligence to be performed.

If these two things have been done, these are the next steps that must be taken.

Examination of documents that are the responsibility of the new owner (eg sale and purchase agreement, title to assets, tax, and financial reports)

Analysis of company capitalization and profit potential

Talk to company employees to dig deeper into information about business conditions

Talk also with the company’s customers

If there are ongoing lawsuits, seek the assistance of an attorney

Indeed, this process is very long and winding. Many parties are involved in it such as lawyers, accountants, brokers, sellers, and negotiators.

Everything must provide clear and candid information. Small mistakes can be considered criminal acts and can be brought to the realm of law. As an investor or buyer, you must carry out this process carefully and carefully.

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