1. Data Room

A data room is a dedicated space set up for commercial due diligence to store and display relevant data and information on the target enterprise or project for inspection and analysis by the due diligence party. A data room can be physical or virtual, with a physical data room referring to a physical space set up at a location and a virtual data room referring to an online platform provided through the Internet. The role of the data room is to ensure that the party can obtain the true, complete and timely information of the target enterprise or project, while protecting the trade secrets and privacy of the target party. The establishment and management of the data room need to follow the following principles:

Select the appropriate data room format. The physical data room and the virtual data room have their own advantages and disadvantages. The physical data room is safer and more intuitive, but the cost is high, the efficiency is low, and it is not convenient for multi-party collaboration; the virtual data room is more convenient, more efficient, and easier to share, but it is less secure. Low, large amount of information, professional technical support is required. According to the scale, time, budget, objectives and other factors, select the appropriate data room format.

Develop reasonable data room rules. Data room rules refer to the rules that regulate the behavior and authority of the due diligence party in the data room, including the conditions, time, personnel, and methods of entering the data room, as well as the restrictions and requirements for consulting, copying, downloading, printing, and photographing operations in the data room. The development of data room rules needs to balance the information needs of the adjusting party with the information protection of the target party, not only to ensure that the adjusting party can fully understand the target enterprise or project, but also to prevent information leakage or abuse.

Organize and update data room data. Data room data refers to the relevant data and information of the target enterprise or project provided in the data room, including financial statements, contract texts, market research, technical solutions, legal documents, etc. The sorting and updating of data in the data room should follow the following principles:

Classification and coding. Classify the data in the data room according to financial, legal, tax, market, technical and other aspects, and code it according to a certain order and logic, so as to facilitate the search and reference of the adjusting party.

True and complete. The data room information should reflect the true situation of the target enterprise or project, and there should be no false, misleading, concealed or omitted content, otherwise it may cause the due diligence party to make wrong judgment or bear legal responsibility.

Timely and dynamic. Data room information should be updated in a timely manner with changes in the target enterprise or project, reflecting the latest information, to avoid outdated or invalid information affecting the results of due diligence.

Case analysis

Champu Consulting, which provided commercial due diligence services to a European auto parts manufacturer, plans to acquire a Chinese auto parts supplier. Shangpu Consulting has set up a virtual data room for the project, which provides financial, legal, tax, market, technical and other data and information of the target enterprise through the Internet for inspection and analysis by the adjusting party. Champu Consulting has formulated strict data room rules, requiring the due diligence party to sign a confidentiality agreement before entering the data room, restricting the due diligence party's operation rights in the data room, such as prohibiting downloading, printing, photographing, etc., and monitoring and recording the due diligence party's behavior and time in the data room. Shangpu Consulting also updated the data room information in a timely manner, reflecting the latest situation of the target company, such as newly signed contracts, newly obtained patents, and new disputes. Through the virtual data room of Shangpu Consulting, the best party can efficiently and accurately understand all aspects of the target enterprise, providing strong support for acquisition decision-making.

2.Checklist

A due diligence list is a list of all aspects and details of the target enterprise or project that need to be investigated and evaluated when conducting commercial due diligence, which is used to guide and regulate the content and scope of due diligence. The role of the due diligence list is to ensure that the due diligence is comprehensive and systematic and to avoid the omission or neglect of important information or issues. The preparation and use of the due diligence list need to be guided by the following principles:

Customized according to the purpose and object of the due diligence. The due diligence list should be customized according to the purpose and target of the due diligence, I .e. the needs of the due diligence party and the characteristics of the target enterprise or project, rather than using a universal template across the board. Different due diligence purposes and objects need to pay attention to different information and issues, such as acquisition, cooperation, investment, audit and other due diligence purposes, as well as manufacturing, service, science and technology, finance and other due diligence objects.

By due diligence aspect and hierarchy. The due diligence list should be divided according to the aspects and levels of due diligence, that is, the contents of due diligence should be divided into financial, legal, tax, market, technical and other aspects, and then each aspect should be divided into overall, detailed, problem and other levels to form a clear and hierarchical due diligence list. This will help the best party to gain a comprehensive and in-depth understanding of the target enterprise or project from a macro and micro perspective.

Dynamic and flexible adjustment. The due diligence list should be adjusted dynamically and flexibly according to the progress and results of the due diligence, that is, according to the information obtained by the due diligence party and the problems found, the contents of the due diligence list should be added, deleted or modified to adapt to the changes of the due diligence. The due diligence list is not static, but is constantly improved with the deepening of the due diligence.

Case analysis

Champu Consulting, which provides commercial due diligence services to an American Internet company, plans to invest in a Chinese online education platform. According to the purpose and object of due diligence, Shangpu Consulting has customized a due diligence list for the project, including financial, legal, tax, market, technical and other levels of content. In accordance with the due diligence list, Shangpu Consulting conducted a comprehensive and in-depth investigation and evaluation of the financial status, legal compliance, tax risk, market competition, and technological innovation of the target company. According to the progress and results of due diligence, Shangpu consulting has dynamically and flexibly adjusted the due diligence list, such as increasing the user satisfaction, teacher quality, course content and other aspects of the target enterprise, so as to better understand the advantages and potential of the target enterprise.

3.due diligence report

A due diligence report is a report that summarizes and presents the process, results and recommendations of due diligence after the completion of commercial due diligence, and is used to demonstrate and convey the information and value of due diligence to the due diligence party or other interested parties. The role of the due diligence report is to ensure the credibility and effectiveness of the due diligence, and to provide the due diligence party or other relevant parties with a basis and reference for decision-making. The preparation and presentation of the due diligence report needs to be guided by the following principles:

Follow due diligence goals and requirements. The due diligence report should follow the objectives and requirements of due diligence, that is, the content and form of the due diligence report should be determined according to the expectations and objectives of the due diligence party, so as to meet the information needs and decision-making needs of the due diligence party. Different due diligence objectives and requirements need to present different information and values, such as acquisition, cooperation, investment, audit and other due diligence objectives and requirements, all need targeted due diligence reports.

Organize according to due diligence structure and logic. The due diligence report should be organized according to the structure and logic of due diligence, that is, the content of due diligence should be divided into chapters according to financial, legal, tax, market, technical and other aspects, and then divided into subsections according to the overall, detailed, problem and other levels to form a due diligence report with clear structure and rigorous logic. This can help the parties or other relevant parties to fully and deeply understand the process and results of due diligence from a macro and micro perspective.

Highlight due diligence priorities and recommendations. The due diligence report should highlight the focus and recommendations of the due diligence report, that is, in the due diligence report, clearly identify the value, risks and potential of the target enterprise or project, as well as the measures and strategies that the due diligence party or other relevant parties should take to improve the effectiveness and impact of the due diligence. Rather than simply listing data and facts, a due diligence report analyzes and explains the meaning and implications behind the data and facts.

Case analysis

Champu Consulting, which has provided commercial due diligence services to a Chinese e-commerce platform, plans to conduct a strategic cooperation with an Indian e-commerce platform. According to the objectives and requirements of due diligence, Champ Consulting has written a due diligence report for the project, including financial, legal, tax, market, technical and other chapters and subsections. According to the structure and logic of due diligence, Shangpu Consulting has carried out a detailed and systematic description and analysis of the financial situation, legal compliance, tax risk, market competition and technological innovation of the target enterprise. Champ Consulting also highlights the focus and recommendations of due diligence, pointing out the strengths and weaknesses of the target company, as well as the opportunities and challenges of cooperation, as well as the matters that the due diligence party or other relevant parties should pay attention to and take measures. Through the due diligence report of Champ Consulting, the due diligence party or other relevant parties can clearly and accurately understand all aspects of the target enterprise, providing strong support for cooperative decision-making.

4.SWOT analysis

SWOT analysis refers to the method of analyzing and evaluating the strengths (Strengths), weaknesses (Weaknesses), opportunities (Opportunities) and threats (Threats) of the target enterprise or project when conducting business due diligence, and is used to reveal the internal conditions and external environment of the target enterprise or project to determine its value, risk and potential. The role of SWOT analysis is to ensure the simplicity and intuitiveness of the due diligence, and to provide a basis and reference for decision-making by the due diligence party or other interested parties. The implementation and presentation of a SWOT analysis requires the following principles:

Collect and organize relevant information. SWOT analysis should collect and organize relevant information about the target enterprise or project, including its financial, legal, tax, market, technology, etc., as well as its industry, market, policy, competition, etc., in order to facilitate the identification and assessment of strengths, weaknesses, opportunities and threats. Methods of collecting and organizing information can include data rooms, due diligence lists, due diligence reports, etc., as well as other surveys, interviews, questionnaires, etc.

Identify and assess strengths, weaknesses, opportunities and threats. SWOT analysis should identify and assess the strengths, weaknesses, opportunities and threats of the target enterprise or project, I .e. analyze the strengths and weaknesses of the target enterprise or project relative to competitors or partners, as well as the favorable and unfavorable external environment it faces. Methods for identifying and assessing strengths, weaknesses, opportunities, and threats can include PEST analysis, Porter's Five Forces analysis, etc., as well as other methods of analysis, comparison, and evaluation.

Presentation and interpretation of the SWOT matrix. SWOT analysis should present and interpret the SWOT matrix, that is, strengths, weaknesses, opportunities and threats are placed in the four quadrants of a four-grid matrix to form an intuitive graph to facilitate the comparison and correlation of strengths, weaknesses, opportunities and threats. Methods for presenting and interpreting the SWOT matrix can include strategies such as SO, WO, ST, WT, etc., as well as other instructions, inferences, suggestions, etc.

Case analysis

Champu Consulting has provided commercial due diligence services to a Chinese film production company. The company plans to conduct a strategic cooperation with an American film distribution company. According to the purpose and object of due diligence, Shangpu Consulting conducted a SWOT analysis for the project, collected and sorted out the relevant information of the target enterprise, identified and evaluated the strengths, weaknesses, opportunities and threats of the target enterprise, and presented and interpreted the SWOT matrix.

Based on the SWOT matrix, Champ Consulting has proposed the following strategies and recommendations for the target company:

SO Strategy: Take advantage of the advantages to seize the opportunity, that is, take advantage of the rapid growth and huge potential of the Chinese film market, as well as the powerful resources and channels of American film distribution companies, to create high-quality, high-level, and highly popular Sino-US co-production films, and enhance the target The company's brand and revenue.

WO strategy: to overcome the disadvantages and seize the opportunity, that is, to overcome the instability of the quality and level of Chinese film production, as well as the higher rules and standards of American film distribution, to learn from and learn from the experience and technology of American film distribution companies, and to improve the production capabilities and standards of the target enterprises.

ST Strategy: Use advantages to counter threats, that is, take advantage of the rapid growth and huge potential of China's film market, as well as the policy support and market demand for Sino-US film cooperation, and deal with the increasingly fierce competition and supervision of China's film market, as well as the risks and uncertainties of Sino-US film cooperation, and consolidate and expand the market share and influence of the target enterprises.

WT strategy: to avoid the threat of aggravation of disadvantages, that is, to avoid the lack of funds and technology of Chinese film production companies, as well as the poor reputation and reputation of American film distribution companies, aggravating the increasingly fierce competition and supervision of Chinese film market, and the poor trust and communication of Sino-US film cooperation, to seek and establish the long-term stable cooperative relationship and mutually beneficial cooperation mode of the target enterprises and American film distribution companies.

Through the SWOT analysis of Shangpu Consulting, the target company can clearly and intuitively understand its own strengths and weaknesses, as well as the opportunities and threats it faces, providing strong support for cooperative decision-making.

Conclusion

Commercial due diligence is a complex and important task that requires the use of a variety of tools and techniques to improve the efficiency and accuracy of investigations. This article introduces some commonly used commercial due diligence tools and techniques, including data rooms, due diligence lists, due diligence reports, SWOT analysis, etc., and demonstrates the application and value of these tools and techniques in the context of specific cases of Champ Consulting Services clients.