Myth 1: Too much reliance on public information

Public information refers to the information about the target enterprise or project that can be obtained through the network, media, reports, databases and other channels, such as financial data, market share, customer evaluation, industry trends, etc. Public information is one of the important sources of commercial due diligence consulting and can provide some basis and background for due diligence analysis. However, public information also has some limitations and shortcomings, such as the following:

The quality and reliability of public information varies, and there may be problems such as distortion, obsolescence, incompleteness and inconsistency, which need to be verified and screened.

The coverage and depth of public information is limited, which may not reflect the core competitiveness, potential risks, future development and other key factors of the target enterprise or project, and needs to be supplemented and expanded.

The acquisition and analysis of publicly available information is costly, may take a lot of time, effort and resources, and may not be rewarded enough to require optimization and trade-offs.

Therefore, commercial due diligence consulting should not rely too much on publicly available information, but should be combined with other sources of information, such as the following:

The internal information of the target enterprise or project, such as strategic planning, organizational structure, human resources, quality management, R & D innovation, supply chain, customer relationship, etc., can be communicated with the management, employees and partners of the target enterprise or project. Interview, or by visiting and observing the actual operation of the target enterprise or project, to obtain more true, comprehensive and in-depth information.

The professional information of third parties, such as industry experts, industry associations, industry regulators, industry media, industry research institutions, etc., can be obtained by consulting and communicating with these third parties, or by referring to and quoting the reports and opinions of these third parties. Obtain more authoritative, professional, and cutting-edge information.

Competitor information, such as competitors' business models, market strategies, product characteristics, customer feedback, development trends, etc., can be investigated and analyzed with competitors' existing or potential customers, suppliers, distributors, investors, etc., Or by participating in and observing competitors' market activities and public relations events, to obtain more objective, real-time and dynamic information.

In summary, commercial due diligence consulting should avoid relying too much on public information, but should adopt diversified, multi-angle, multi-level information collection and analysis methods to improve the efficiency and effectiveness of due diligence.

Myth 2: Ignoring the internal management of the target enterprise

The internal management of the target enterprise refers to the management system and management level of the target enterprise in terms of organizational structure, human resources, financial control, operation process, risk prevention, etc., which is an important factor affecting the stability, sustainability and growth of the target enterprise. The internal management of the target enterprise not only reflects the historical performance and current situation of the target enterprise, but also indicates the future development and potential of the target enterprise. However, business due diligence consulting sometimes ignores the internal management of the target enterprise and focuses only on the external performance of the target enterprise, such as the following:

Business due diligence consulting sometimes pays too much attention to the financial data of the target enterprise and ignores the financial quality and financial risks of the target enterprise, such as whether there are false accounts, capital occupation, high asset-liability ratio, insufficient cash flow, tax disputes and other issues. These problems may lead to changes or deterioration in the financial situation of the target enterprise, thus affecting the value and income of the target enterprise.

Business due diligence consulting sometimes pays too much attention to the market performance of the target enterprise, while ignoring the market foundation and market risks of the target enterprise, such as whether there are problems such as customer concentration, customer loss, market saturation, market changes, market competition, etc. These problems may lead to the decline or loss of the market share of the target enterprise, thus affecting the competitiveness and development space of the target enterprise.

Commercial due diligence consulting sometimes relies too much on the product characteristics of the target enterprise, while ignoring the product quality and product risks of the target enterprise, such as whether there are product defects, product obsolescence, product infringement, product recall, product complaints and other problems, which may lead to the damage or loss of the product reputation of the target enterprise, thus affecting the brand power and innovation of the target enterprise.

Therefore, business due diligence consulting can not ignore the internal management of the target enterprise, but to deeply understand and evaluate the management status and management ability of the target enterprise, such as the following points:

Commercial due diligence consulting should comprehensively review the financial statements and financial indicators of the target enterprise, and at the same time pay attention to the financial policies and financial norms of the target enterprise, such as whether there are reasonable budgeting, financial accounting, financial reporting, financial audit, financial supervision and other systems and processes, and whether there are effective cost control, capital management, risk control, tax planning and other measures and methods, to ensure the financial quality and financial security of the target enterprise.

Business due diligence consulting should fully understand the market situation and market strategy of the target enterprise, and at the same time assess the market potential and market risk of the target enterprise, such as whether there is a clear market positioning, market segmentation, market objectives, market channels, etc., and whether there is effective market research, market analysis, marketing, market expansion, etc., in order to enhance the market competitiveness and market share of the target enterprise.

Commercial due diligence consulting should comprehensively evaluate the product characteristics and product advantages of the target enterprise, and at the same time examine the product quality and product risks of the target enterprise, such as whether there is perfect product planning, product design, product development, product testing, product listing, etc., and whether there is effective product management, product improvement, product innovation, product protection, etc., in order to enhance the product strength and product value of the target enterprise.

Myth 3: Lack of sensitivity to market changes

Market change refers to the change of market environment, market demand, market supply, market rules, etc. in time and space, which is an important factor affecting the opportunities and challenges of the target enterprise or project. Market changes may be cyclical, trend, sudden, structural, etc., requiring commercial due diligence consulting to have sufficient sensitivity and insight, as well as timely response and adjustment capabilities. However, commercial due diligence consulting sometimes lacks sensitivity to market changes and relies only on historical data and existing information, such as the following:

Business due diligence consulting sometimes ignores changes in the market environment, such as policies and regulations, social culture, economic situation, technological progress, ecological and environmental protection, etc. These changes may have a significant impact on the operation and development of the target enterprise or project, such as providing new opportunities, bringing new challenges, triggering new risks, promoting new changes, etc.

Commercial due diligence consulting sometimes ignores changes in market demand, such as customer demand, consumption habits, consumption preferences, consumption levels, consumption scenarios, etc. These changes may have a significant impact on the products and services of the target enterprise or project, such as increasing new Demand, reducing old demand, changing demand structure, improving demand standards, expanding demand scope, etc.

Commercial due diligence consulting sometimes ignores changes in market supply, such as suppliers, raw materials, production equipment, production processes, production costs, etc. These changes may have a significant impact on the production and supply of target enterprises or projects, such as improving supply quality, reducing supply costs, increasing supply efficiency, optimizing supply structure, expanding supply channels, etc.

Therefore, commercial due diligence consulting should not lack sensitivity to market changes, but should timely capture and analyze information and signals of market changes, such as the following:

Commercial due diligence consultation should regularly track and monitor changes in the market environment, such as policies and regulations, social culture, economic situation, technological progress, ecological and environmental protection, etc., as well as the impact and trend of these changes on the target enterprise or project, such as whether it is conducive to the compliance, adaptability, competitiveness and innovation of the target enterprise or project, and whether corresponding adjustments and improvements are needed.

Business due diligence consulting should regularly investigate and analyze changes in market demand, such as customer demand, consumption habits, consumption preferences, consumption levels, consumption scenarios, etc., as well as the impact and trends of these changes on the products and services of the target company or project, such as Whether it is conducive to the satisfaction, loyalty, reputation, growth, etc. of the target company or project, and whether corresponding optimization and innovation are needed.

Commercial due diligence consulting shall regularly inspect and evaluate changes in market supply, such as suppliers, raw materials, production equipment, production processes, production costs, etc., as well as the impact and trend of these changes on the production and supply of the target enterprise or project, such as whether it is conducive to the quality, cost, efficiency, stability, etc. of the target enterprise or project, and whether it needs to be upgraded and expanded accordingly.

In summary, commercial due diligence consulting should be more sensitive to market changes, but should adopt dynamic, forward-looking, strategic market analysis and evaluation methods to enhance the flexibility and effectiveness of due diligence.

Myth 4: Ignore the dynamics of competitors

Competitor dynamics refer to the behavior and performance of competitors in the market, such as competitors' strategic objectives, market strategies, product characteristics, customer feedback, development dynamics, etc., which are important factors affecting the competitive advantage and competitive risk of the target enterprise or project. The dynamics of competitors may be positive, negative, active, passive, open, secretive, etc., which requires sufficient attention and vigilance of commercial due diligence consulting, as well as timely response and prevention capabilities. However, commercial due diligence consulting sometimes ignores the dynamics of competitors and focuses only on the target company or project itself, such as the following:

Business due diligence consulting sometimes ignores the strategic objectives of competitors, such as the competitor's vision, mission, values, core competitiveness, long-term planning, etc., which may affect the competitor's behavior and decision-making, such as whether to target enterprises or projects for mergers and acquisitions, investment, cooperation, competition, imitation, etc, and whether it will pose a threat or opportunity to the market position, market share, market profit, etc. of the target enterprise or project.

Business due diligence consulting sometimes ignores competitors' market strategies, such as competitors' market positioning, market segmentation, market objectives, market channels, etc., which may affect the performance and effectiveness of competitors, such as whether they will compete or replace the products and services of the target enterprise or project, and whether it will affect or attract the target enterprise or project's customer base, customer satisfaction, customer loyalty, etc.

Commercial due diligence consulting sometimes ignores competitors' product features, such as competitors' product features, product quality, product prices, product innovation, product differences, etc., which may affect competitors' strengths and weaknesses, such as whether they will form strengths or weaknesses for the products and services of the target company or project, and whether it will affect or threaten the market share, market profit, market growth, etc. of the target enterprise or project.

Commercial due diligence consulting sometimes ignores the development trends of competitors, such as the development speed, development direction, development scale, development mode, etc. of competitors, which may affect the future and potential of competitors, such as whether it will bring challenges or opportunities to the market position, market share and market profit of the target enterprise or project, and whether it will affect or enlighten the development strategy, development path and development goal of the target enterprise or project.

Therefore, commercial due diligence consulting cannot ignore the dynamics of competitors, but should pay close attention to and analyze the behavior and performance of competitors, such as the following points:

Commercial due diligence consulting should clearly identify and define the scope and types of competitors, such as direct competitors, indirect competitors, potential competitors, alternative competitors, etc., as well as the characteristics and advantages and disadvantages of these competitors, such as scale, region, industry, Products, customers, etc., in order to conduct targeted competitive analysis and evaluation.

Business due diligence consulting shall systematically collect and organize competitors' information and data, such as competitors' strategic objectives, market strategies, product characteristics, customer feedback, development trends, etc., as well as the sources and reliability of such information and data, such as public information, internal information, third-party information, etc., in order to conduct a basis for competitive analysis and evaluation.

Business due diligence consulting should scientifically use and construct competitor analysis and evaluation tools, such as competitor analysis matrix, competitor strengths and weaknesses analysis, competitor strategy analysis, competitor forecast analysis, etc., in order to conduct in-depth competitive analysis and evaluation.

In summary, commercial due diligence consulting should pay attention to the dynamics of competitors, but should adopt comprehensive, systematic and scientific competitive analysis and evaluation methods to enhance due diligence competitiveness and prevention.

Conclusion

Commercial due diligence consulting is a highly professional service, and attention should be paid to avoiding some common misunderstandings, otherwise it may lead to distortion of due diligence results, decision-making mistakes, investment failure and other consequences. Based on the practical experience of Shangpu Consulting, this paper summarizes the four misunderstandings of commercial due diligence consulting, namely: relying too much on public information, ignoring the internal management of the target enterprise, lacking sensitivity to market changes, and ignoring the dynamics of competitors. This paper also puts forward the corresponding solutions and suggestions for these four misunderstandings, in order to provide some reference and enlightenment for the implementation and promotion of commercial due diligence consulting.

Shangpu Consulting is a professional business due diligence consulting company with many years of industry experience and professional team to provide customers with high-quality, high-efficiency and high-value business due diligence consulting services. Shangpu Consulting can not only help customers avoid the misconceptions of commercial due diligence consulting, but also help customers identify opportunities for commercial due diligence consulting, thus helping customers make the right decisions and achieve successful investments.

Here are some of the success stories of Champ Consulting:

Shangpu Consulting provides a business due diligence consulting service for an international investment fund on a leading online education platform in China. Through comprehensive, in-depth and objective analysis and evaluation, it helps the investment fund understand the business model, market environment, Competitive advantages, risk factors, etc. of the target company, as well as the future development and potential of the target company, thereby helping the investment fund successfully complete the investment in the target company, it paid off handsomely.

Shangpu Consulting provides a well-known domestic e-commerce platform with commercial due diligence consulting services for an overseas cross-border e-commerce platform. Through comprehensive, in-depth and objective analysis and evaluation, it helps the e-commerce platform understand the business model, market environment, competitive advantages, risk factors, etc. of the target enterprise, as well as the future development and potential of the target enterprise, thus helping the e-commerce platform to successfully complete the merger and acquisition of the target enterprise, achieved market expansion and business growth.

champ consulting provides a leading medical device company in china with commercial due diligence consulting service for an innovative medical device company in america. through comprehensive, in-depth and objective analysis and evaluation, it helps the medical device company to understand the business model, market environment, competitive advantages, risk factors and so on of the target enterprise, as well as the future development and potential of the target enterprise, so as to help the medical device company successfully complete the cooperation with the target enterprise, and realize the technology introduction and product innovation.