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Discuss the implications for "due diligence" for corporations and workers. In Labor Studies

Discuss the implications for "due diligence" for corporations and workers.

In Labor Studies

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Due diligence is a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.

A potential deal involves several types of due diligence. There may be as many as 20 or more angles of due diligence analysis some of them are:

  1. Financial DD: seeks to check whether the financials showcased in the Confidentiality Information Memorandum are accurate or not.

  2. Administrative DD: This involves verifying admin-related items such as facilities, occupancy rate, number of workstations, etc

  3. Human Resources DD: Analysis of total employees, including current positions, vacancies, due for retirement, and serving notice period, current salaries, bonuses paid during the last three years, and years of service comes under this.

  4. Asset DD: include a detailed schedule of fixed assets and their locations,all lease agreements for equipment, a schedule of sales and purchases of major capital equipment during the last three to five years, real estate deeds, mortgages, and use permits.

  5. Taxes DD: includes a review of all taxes the company is required to pay and ensuring their proper calculation with no intention of under-reporting of taxes. Also, verify the status of any tax-related case pending with the tax authorities

  6. Legal DD: includes examination and review of the elements such as copy of Memorandum and Articles of Association, minutes of Board Meetings for the last three years,minutes of all meetings or actions of shareholders for the last three years,copy of share certificates issued to Key Management Personnel, all guarantees to which the company is a party,etc

  7. Strategic Fit: evaluating how well the target company fits in with the overall strategic business plan of the buyer.

  8. Intellectual Property DD: Schedule of patents and patent applications, copyrights, trademarks, and brand names,pending patents clearance documents,any pending claims case by or against the company in regard to violation of intellectual property,etc. Comes under this.

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