Due diligence is an essential part of business investment, which can help investors understand the real situation of the target enterprise, assess the risks and returns, and formulate reasonable investment strategies. However, with the change of market environment and the development of technology, traditional due diligence methods can no longer meet the needs of investors, especially in the face of emerging industries, innovative enterprises or complex cross-border transactions. Therefore, investors need to use innovative and transformative thinking to break the inherent due diligence model and adopt a more flexible, deeper and more comprehensive due diligence approach to adapt to the changing business world. This paper will discuss how to use innovation and change thinking to make due diligence from the following three aspects: first, according to the characteristics of the target enterprise and the industry background, customize the due diligence scheme; The second is to use big data, artificial intelligence and other technical means to improve the efficiency and quality of due diligence. The third is to combine actual cases to show the application effect of innovation and change thinking in due diligence.

1. according to the characteristics and industry background of the target enterprise, customize the adjustment scheme.

Traditional due diligence methods are usually carried out in accordance with fixed processes and standards, covering financial, legal, tax, marketing, operations and other aspects. Although this method is simple and easy to implement, it also has some defects: first, it ignores the particularity and difference of the industry in which the target enterprise is located; second, it ignores the innovation and potential of the target enterprise itself; third, it ignores the opportunities and challenges faced by the target enterprise. Therefore, when conducting due diligence, investors need to customize the due diligence program according to the characteristics of the target enterprise and the industry background, focusing on the following aspects:

The development trend of the industry in which the target enterprise is located, the competitive landscape, regulatory policies and other factors, as well as the impact on the target enterprise;

The core competitiveness, innovation ability, growth potential and other factors of the target enterprise, as well as the comparison with other enterprises in the same industry;

The technologies, products, services, models and other factors involved in the target enterprise, as well as its feasibility, sustainability, replicability and other assessments;

Risk identification, risk management, risk response and other factors of the target enterprise, as well as their impact on the return on investment.

For example, Champ Consulting once provided due diligence services to a European private equity fund, and the target company was a Chinese new energy vehicle manufacturer. When conducting due diligence, the Shangpu consulting team not only conducted a detailed analysis of the target company's financial status, legal compliance, and market share, but also focused on the following aspects:

The development prospects, competitive advantages and policy support of the new energy vehicle industry in which the target enterprise is located;

The technological innovation ability, product design ability and brand building ability of the target enterprise;

The target enterprise's supply chain management capabilities, production efficiency capabilities, quality control capabilities, etc;

The target enterprise's capital needs, sources of funds, and use of funds.

Through such a customized due diligence program, the Shangpu consulting team provides investors with a comprehensive and in-depth target enterprise evaluation report to help investors make an informed investment decision.

2. use big data, artificial intelligence and other technical means to improve the efficiency and quality of due diligence.

With the development of technology, the amount of data that can be acquired and processed in the process of due diligence is increasing, which is both an opportunity and a challenge. On the one hand, big data can provide more information sources and analysis angles for due diligence, and increase the comprehensiveness and objectivity of due diligence; on the other hand, big data also brings more complexity and uncertainty to due diligence, increasing the difficulty and risk of due diligence. Therefore, when conducting due diligence, investors need to use big data, artificial intelligence and other technical means to improve the efficiency and quality of due diligence, including the following aspects:

Use big data platform to collect and integrate public and private data related to target enterprises, including financial statements, industry reports, social media, customer feedback, etc;

Use artificial intelligence algorithms to clean, analyze, mine and visualize the data related to the target enterprise to extract valuable information and insights;

Use artificial intelligence aids to automate review, comparison and validation of documents related to the target enterprise to reduce manual errors and omissions;

Using the artificial intelligence prediction model, the future development trend, income level and risk level of the target enterprise are estimated and evaluated.

For example, Champ Consulting once provided due diligence services to a U.S. venture capital firm targeting an Indian e-commerce platform. In conducting due diligence, the Champ Consulting team not only used traditional interviews, observations, trials and other methods to collect information, but also used the following technical means:

Using the big data platform, the target enterprise's sales volume, number of users, market share and other data in various regions of India were obtained and compared with competitors;

Using artificial intelligence algorithm, the target enterprise's word-of-mouth evaluation on social media, user satisfaction, user retention using artificial intelligence algorithm, the target enterprise's word-of-mouth evaluation on social media, user satisfaction, user retention rate and other indicators, and compared with the industry average;

Using artificial intelligence aids, the target enterprise's contracts, agreements, certificates and other documents were reviewed, and their legality, validity and consistency were checked;

Using the artificial intelligence prediction model, the target enterprise's revenue growth rate, profit margin, market share and other indicators in the next three years are estimated, and the corresponding confidence interval is given.

Through such technical means, the Shangpu consulting team provides investors with an efficient and accurate target enterprise evaluation report, helping investors grasp a promising investment opportunity.

3. combined with actual cases to show the application effect of innovation and change thinking in due diligence

In order to more intuitively show the application effect of innovation and change thinking in due diligence, this paper will combine two practical cases to illustrate. The two cases were due diligence services provided by Champ Consulting to a Japanese strategic investment institution, the target enterprise was a Thai agricultural technology company, and Champ Consulting provided due diligence services to a Chinese M & A fund, the target enterprise was a German medical device company.

Case 1: Japan's strategic investment agency's due diligence on Thai agricultural science and technology companies

Thai Agricultural Science and Technology Company is an innovative company focused on improving agricultural production and management using biotechnology and digital technology. The company has a number of patented technologies, including gene editing, microbial fertilizer, smart irrigation, etc. The company's customers include the Thai government, farmers' cooperatives, and agricultural enterprises. The company's vision is to improve agricultural efficiency and quality, ensure food security and environmental sustainability through scientific and technological innovation.

Japan Strategic Investment Agency is an organization that focuses on finding investment projects with strategic and social value in Asia. The agency is interested in Thai agricultural science and technology companies and hopes to establish long-term cooperative relations through investment and learn from its technology and experience to promote agricultural science and technology innovation in Japan.

In providing due diligence services to Japanese strategic investment institutions, the Shangpu consulting team used innovative and transformational thinking to conduct in-depth analysis from the following aspects:

The development status, development potential and development obstacles of the agricultural science and technology industry in which Thailand Agricultural Science and Technology Company is located;

The core technology, core products and core services of Thai agricultural science and technology company are analyzed with other enterprises in the same industry;

Thai agricultural science and technology company's business model, profit model, cost structure, etc., and with other enterprises in the same industry to conduct a profitability analysis;

The social responsibility, social influence and social recognition of Thai agricultural science and technology company, and the social value analysis with other enterprises in the same industry;

The possibility, mode and effect of cooperation between Thai agricultural science and technology company and Japanese strategic investment institution are also given.

Through such innovative and transformative thinking, the Shangpu consulting team provides investors with a comprehensive and in-depth target enterprise evaluation report, helping investors to establish an investment relationship with strategic and social significance.

Case 2: Chinese M & A funds due diligence on German medical device companies

The German Medical Device Company is an established company with a century-old history. It mainly produces and sells various high-end medical devices, including pacemakers, artificial joints, and artificial blood vessels. The company enjoys a high reputation and market share in the European market, but has not yet made a major breakthrough in the Asian market. In recent years, the company has faced problems such as slow technology update, rising costs, and intensified competition, which has led to a decline in performance, so it has sought to sell part or all of its equity.

China M & A Fund is an organization that focuses on finding investment projects with growth potential and market opportunities in Europe. The agency is interested in German medical device companies, hoping to achieve industrial upgrading and market expansion through mergers and acquisitions, and promote German medical device brands and technologies in China.

In providing due diligence services to China M & A funds, the Shangpu consulting team used innovative and transformative thinking to conduct in-depth analysis from the following aspects:

The development trend, development scale and development difficulties of the medical device industry in which the German medical device company is located;

The technical level, product quality and service level of German medical device companies are analyzed with other enterprises in the same industry;

Market positioning, market strategy, market risk, etc. of German medical device companies, and competitive analysis with other companies in the same industry;

The financial situation, financial risk, financial forecast, etc. of German medical device companies, and conducted profitability analysis with other enterprises in the same industry;

The possibility, mode and effect of merger and acquisition between German medical device companies and Chinese M & A funds are given, and the suggestions and precautions for merger and acquisition are given.

Through such innovative and transformative thinking, the Shangpu consulting team provides investors with an accurate and profound target enterprise evaluation report, helping investors to achieve a growth and opportunistic M & A transaction.

Conclusion

The due diligence is an indispensable link in business investment, which is related to the interests and risks of investors. As the business world continues to change, traditional due diligence methods can no longer adapt to new situations. Investors need to use innovative and transformative thinking to create more flexible, deeper and more comprehensive due diligence methods.