1. what is investment due diligence?

Investment due diligence (Due Diligence, shortDD) refers to the comprehensive, in-depth and objective evaluation and analysis of the financial, legal, tax, market, technology, environment, society and other aspects of the target enterprise or project before making an investment decision, so as to determine its true business value and potential risks, so as to provide basis and support for investment decision-making.

Investment due diligence is an active, purposeful, planned and methodical investigation activity, which is not only a process of information collection and analysis, but also a process of value judgment and risk control. Through investment due diligence, investors can understand the real situation of the target enterprise or project, discover its advantages and disadvantages, evaluate its future development prospects and profitability, determine its reasonable valuation range, formulate appropriate investment strategies and programs, and avoid or reduce possible disputes and disputes.

Why do 2. make investments?

The purpose of investment due diligence is to protect the interests of investors and maximize the benefits of investment. Specifically, there are the following aspects:

Verify the authenticity and legitimacy of the target enterprise or project. By verifying the historical evolution, organizational structure, equity relationship, operating status, financial status, legal status, etc. of the target enterprise or project, it can be confirmed whether there are false statements, concealment of facts, violations of laws and regulations, etc., to avoid fraud or misleading.

Discover the strengths and weaknesses of the target business or project. By analyzing the industry environment, market competition, customer demand, product quality, technical level and management ability of the target enterprise or project, we can identify its position and influence in the market, as well as the opportunities and challenges it faces, and find out its core competitiveness and potential risks.

Assess the business value and profitability of the target business or project. By auditing and forecasting the financial data, operating data and cost data of the target enterprise or project, it is possible to calculate different valuation indicators such as net asset value, earnings value and market value, determine its reasonable valuation range and provide a basis for investment pricing.

Develop appropriate investment strategies and programs. Based on the business value and risk profile of the target enterprise or project, as well as the investment objectives and preferences of investors, you can choose appropriate investment methods (such as equity investment, debt investment, mixed investment, etc.), investment scale (such as full investment, partial investment, phased investment, etc.), investment period (such as short-term investment, medium-term investment, long-term investment, etc.), Exit methods (such as listing exit, merger exit, repurchase exit, etc.), etc., formulate reasonable investment agreements and terms to protect the rights and returns of investors.

How do 3. make good investments?

Investment due diligence is a complex and professional task that requires extensive experience and professional skills. In general, investment due diligence can be divided into the following steps:

Determine the goal and scope of due diligence. According to the needs and objectives of investors, determine what aspects of due diligence should be carried out on the target enterprise or project, such as financial due diligence, legal due diligence, market due diligence, technical due diligence, etc., as well as what specific content and issues should be covered, such as financial statements, contract documents, market share, technology patents, etc.

Develop due diligence plans and arrangements. Develop detailed due diligence plans and arrangements based on due diligence objectives and scope, including determining the composition and division of labor of due diligence teams, determining due diligence timetables and progress, determining due diligence methods and tools, determining sources and channels of due diligence information, and determining the format and content of due diligence reports.

Perform due diligence. According to the due diligence plan and arrangement, carry out specific due diligence work, including collecting and sorting out all kinds of information and data provided by target enterprises or projects, obtaining first-hand information and data through on-site interviews, on-site visits, market research, etc., and processing and interpreting information and data through analysis and comparison, modeling and prediction, risk assessment, etc. to form preliminary due diligence conclusions and suggestions.

Write a due diligence report. According to the process and results of the implementation of the due diligence work, write a detailed due diligence report, including background introduction, main findings, business value assessment, risk tips, investment recommendations, etc. of the target enterprise or project, and provide relevant supporting materials and attachments.

submit due diligence reports. Submit the written due diligence report to the investor and make necessary modifications and additions based on the investor's feedback.

What success stories do 4. have?

In order to better demonstrate the value and significance of investment due diligence, the following are some successful cases based on the professional experience of Shangpu Consulting in the field of investment due diligence:

Case 1: A well-known domestic Internet company made an equity acquisition of an overseas e-commerce platform. In order to evaluate the commercial value and risk of the target enterprise, Shangpu Consulting provides a full range of investment due diligence services for the Internet company, including in-depth analysis and evaluation of the financial situation, legal situation, market situation and technical situation of the target enterprise, finds out the core competitiveness and potential risks of the target enterprise, and formulates reasonable purchase price and terms for the Internet company, helped them successfully complete the acquisition.

Case 2: A well-known domestic pharmaceutical company makes strategic investment in an overseas biotechnology company. In order to evaluate the technical level and market prospect of the target enterprise, Shangpu Consulting provided professional investment due diligence service for the pharmaceutical company, including systematic investigation and analysis of the technical patent, product pipeline, clinical trial and market demand of the target enterprise, found the technical advantage and market potential of the target enterprise, and formulated the cooperation mode and scheme for the pharmaceutical company, help it to achieve technology introduction and market expansion.

Case 3: A well-known domestic private equity fund makes equity investment in a domestic new energy vehicle company. In order to evaluate the development prospect and profitability of the target enterprise, Shangpu Consulting provides professional investment due diligence services for the private equity fund, including auditing and forecasting the financial data, operating data and cost data of the target enterprise, analyzing and evaluating the industry environment, market competition and customer demand of the target enterprise, and discovering the growth and profitability of the target enterprise, developed an investment strategy and program for the private equity fund to help it achieve a return on investment.

5. Summary

Investment due diligence is a comprehensive, in-depth and objective evaluation and analysis of the target enterprise or project before the investor makes an investment decision, and is an important means of investment risk control and value discovery. Investing in due diligence requires extensive experience and professional skills, which generally include steps such as defining due diligence objectives and scope, developing due diligence plans and arrangements, implementing due diligence, writing due diligence reports, and delivering due diligence reports. Through investment due diligence, investors can verify the authenticity and legitimacy of the target enterprise or project, discover its advantages and disadvantages, evaluate its commercial value and profitability, and formulate appropriate investment strategies and programs.