Commercial due diligence is required before a commercial transaction or cooperation, whether in the form of a merger, investment, joint venture or other form. Commercial due diligence refers to the process of comprehensive, in-depth and objective evaluation and analysis of the financial, legal, market and operational aspects of the transaction or partner. The purpose of business due diligence is to reduce risk, increase returns, and optimize decision-making. Business due diligence is not only a technical job, but also a strategic job. It needs to understand and evaluate the value and potential of the transaction or partner, as well as the possible problems and risks from multiple angles and levels.

Champu Consulting is a consulting firm specializing in commercial due diligence services, with extensive industry experience and expertise. We provide our customers with customized business due diligence solutions to help them achieve business goals and value. In our practice, we have found that there are some core questions that we must ask ourselves and each other when conducting business due diligence. These questions cover the main areas of business due diligence, including strategy, markets, competition, customers, products, teams, finance, legal, risk and opportunity. By answering these questions, you can help the transaction or partner to better understand their own and each other's strengths and weaknesses, explore potential value and synergies, identify possible pitfalls and challenges, and develop more reasonable and effective business plans and strategies.

Here are the ten core issues we have summarized:

Why did you make this deal or cooperation?

This is the most basic and important question. You need to be clear about your business goals and motivations, and what you expect from the deal or partnership. You need to evaluate whether this transaction or cooperation is in line with your strategic direction and vision, whether it can bring sustainable competitive advantages and growth momentum, and whether it can create greater value and profits. You also need to consider whether there are other options or alternatives to the deal or partnership, as well as the advantages, disadvantages and cost benefits of these options or alternatives.

How well do you know each other?

Before doing business due diligence, you need to have a basic understanding of the other party, including the other party's background, history, business model, organizational structure, culture, vision, etc. You need to know what are the core competitiveness and advantages of the other party, what is the market position and share of the other party, what is the customer base and demand of the other party, what is the product line and innovation ability of the other party, what is the team quality and ability of the other party, what is the financial situation and profitability of the other party, what is the legal risk and compliance of the other party, etc. You need to collect and verify this information through a variety of channels and methods, including public information, industry reports, market research, expert interviews, site visits, data analysis, etc.

How well do you fit each other?

After doing business due diligence, you need to make a comprehensive comparison and evaluation of yourself and each other to see how much fit you have. You need to analyze the similarities and differences between you from the perspectives of strategy, market, competition, customers, products, teams, finance, law, etc., as well as the impact and challenges brought about by these similarities and differences. You need to evaluate whether you have enough commonalities and complementarities, whether you can form effective synergies, whether you can integrate and optimize resources, whether you can improve market competitiveness and customer satisfaction, whether you can increase revenue and reduce costs, and so on.

What value can you bring to each other?

After doing business due diligence, you need to be clear about what value you can bring to the other party. You need to think from the other person's point of view to see what problems you can solve for the other person, what needs you can meet, what support you can provide, and what opportunities you can create. You need to demonstrate your core strengths and competencies, as well as your value match with each other. You need to make the other person feel attractive and motivated to trade or cooperate with you.

What value does the other bring to you?

After making commercial due diligence, you also need to know what value the other party can bring to you. You need to think from your own point of view to see what problems the other party can solve for you, what needs to meet, what support to provide, and what opportunities to create. You need to identify each other's core strengths and competencies, as well as your value match. You need to make yourself feel attractive and motivated to deal or cooperate with each other.

What are the terms of the deal or cooperation?

After the commercial due diligence, you need to determine the terms of the transaction or cooperation? You need to determine the price, equity, share, term, terms, etc. of the transaction or cooperation based on your and the other party's value assessment and expected return, as well as market conditions and industry standards. You need to fully communicate and negotiate with the other party to reach an agreement that is acceptable and satisfactory to both parties. You need to pay attention to the feasibility and legality of the transaction or cooperation, and avoid any factors that are not conducive to the interests of both parties.

What are the risks of trading or cooperation?

After doing business due diligence, you need to identify and assess the risks of the transaction or partnership. You need to analyze the risks that may arise from both internal and external aspects, including market risk, competitive risk, technical risk, financial risk, legal risk, management risk, cultural risk, etc. You need to quantify and prioritize these risks, as well as develop appropriate responses and scenarios. You need to establish an effective risk-sharing and sharing mechanism with the other party to reduce the pressure and loss on both sides.

What are the opportunities for trading or cooperation?

After doing business due diligence, you need to identify and seize opportunities for trading or collaboration. You need to look for possible opportunities both internally and externally, including market opportunities, competitive opportunities, technical opportunities, financial opportunities, legal opportunities, management opportunities, cultural opportunities, etc. You need to quantify and prioritize these opportunities, as well as develop strategies and plans to exploit them accordingly. You need to establish an effective opportunity sharing and expansion mechanism with the other party to increase the benefits and value of both parties.

What is the plan after the transaction or cooperation?

After doing business due diligence, you need to develop a detailed and implementative post-transaction or partnership plan. You need to determine the organizational structure, management model, business processes, human resources, financial budget, marketing, etc. of the transaction or cooperation based on your and the other's goals and expectations, as well as the terms and results of the transaction or cooperation. You need to communicate and coordinate closely with the other party to ensure a smooth transition and operation after the transaction or cooperation.

What is the assessment after the transaction or cooperation?

After a commercial due diligence, you also need to develop an effective and ongoing post-transaction or partnership assessment. You need to determine the effect and impact of the transaction or cooperation based on your and the other party's goals and expectations, as well as the comparison of data before and after the transaction or cooperation. You need to have regular feedback and improvement with each other to improve satisfaction and performance after a transaction or partnership.

Conclusion

Business due diligence is an important and complex task that involves the collection, analysis and evaluation of information in multiple areas and levels. When doing business due diligence, there are some core questions that must be asked of yourself and the other party. These questions can help the transaction or partner to better understand themselves and each other, explore potential value and synergies, identify possible pitfalls and challenges, and develop more reasonable and effective business plans and strategies. As a professional business due diligence service provider, Shangpu Consulting can provide customers with customized business due diligence solutions to help customers achieve business goals and values.