1.Commercial due diligencePurpose

The purpose of commercial due diligence is to enable the parties to a transaction or cooperation to fully understand the true situation of the target enterprise or project, to avoid information asymmetry and potential risks, and to ensure the fair, reasonable and smooth conduct of the transaction or cooperation. Specifically, the purpose of commercial due diligence can be summarized as follows:

Assess the value of the target business or project. Commercial due diligence can assess its intrinsic and extrinsic value by analyzing the financial, market, and technical aspects of the target enterprise or project to determine its current and future revenues, costs, profits, assets, liabilities, cash flows, etc., and to provide a basis for the pricing and terms of the transaction or cooperation.

Identify the risks of the target business or project. Through the examination of the legal, tax, environmental and social aspects of the target enterprise or project, commercial due diligence can find out whether there are problems such as violation of law, breach of contract, litigation, dispute, tax arrears, pollution, infringement, etc., so as to identify its potential legal risks, tax risks, environmental risks, social risks, etc., and provide a basis for the risk prevention and avoidance of transactions or cooperation.

Discover the potential of the target business or project. Business due diligence can understand the industry environment, competitive advantage, innovation ability, talent structure, organizational culture and other factors through the research on the market, technology, human resources and management of the target enterprise or project, so as to find out its future development space, growth opportunities and improvement direction, so as to provide a basis for the strategic planning and integration of transactions or cooperation.

2.Commercial due diligencePrinciple

The principle of commercial due diligence refers to the basic guidelines that should be followed when conducting commercial due diligence to ensure the quality and effectiveness of commercial due diligence. In general, the principles of commercial due diligence can be summarized as follows:

Objectivity. Commercial due diligence should be based on facts, supported by data, guided by logic, avoid subjective assumptions and one-sided prejudices, objectively reflect the real situation of the target enterprise or project, do not exaggerate or belittle, do not conceal or cover up, do not bias or favor.

comprehensiveness. Commercial due diligence should conduct a comprehensive investigation and analysis of all aspects of the target enterprise or project from multiple angles and levels, without omission or repetition, not rough or subtle, not superficial or in-depth, not limited or generalized, so as to ensure the integrity and appropriateness of the content and scope of commercial due diligence.

Systemic. Commercial due diligence should follow certain processes and methods to conduct orderly and organic investigation and analysis of all aspects of the target enterprise or project, without chaos or complexity, without chaos, without dispersion or chaos, without isolation or isolation, to ensure the clarity and coordination of the process and structure of commercial due diligence.

Targeted. Commercial due diligence should investigate and analyze the key points and differences of all aspects of the target enterprise or project according to the purpose and demand of the transaction or cooperation. It should not be generalized or generalized. It should not be targeted or made out of nothing, so as to ensure that the key points and differences of commercial due diligence are prominent and clear.

3.Commercial due diligenceProcess

The process of commercial due diligence refers to the basic steps that should be followed in carrying out commercial due diligence to ensure the efficiency and effectiveness of commercial due diligence. In general, the process of commercial due diligence can be summarized into the following stages:

The preparation phase. At this stage, the main task of commercial due diligence is to determine the purpose, scope, method, team, plan, budget, etc. of commercial due diligence, as well as to sign confidentiality agreements and due diligence agreements with the relevant parties of the target enterprise or project, so as to prepare for the formal launch of commercial due diligence.

The execution phase. At this stage, the main task of commercial due diligence is to conduct a comprehensive, in-depth and systematic investigation and analysis of the financial, legal, tax, market and technical aspects of the target enterprise or project through consulting materials, interviewing personnel and on-the-spot investigation according to the scope and method of commercial due diligence, and to communicate and negotiate with the relevant parties of the target enterprise or project, to obtain and verify the information and data required for commercial due diligence.

Summary stage. At this stage, the main task of commercial due diligence is to summarize and organize the results of the investigation and analysis of the target enterprise or project according to the purpose and needs of commercial due diligence, as well as to prepare and submit commercial due diligence reports and recommendations to demonstrate and communicate the value and results of commercial due diligence.

4.Commercial due diligenceMethod

The method of commercial due diligence refers to the basic techniques that should be used in commercial due diligence to ensure the quality and effectiveness of commercial due diligence. In general, the approach to commercial due diligence can be summarized as follows:

Diversification. Commercial due diligence should use multiple channels and sources to collect and obtain information and data of various aspects of the target enterprise or project. It should not only rely on the information provided by the target enterprise or project, but also obtain and verify the information and data of the target enterprise or project through public reports, network search, industry experts, market research and other methods, to increase the diversity and reliability of commercial due diligence information and data.

Quantitative. Commercial due diligence should use a variety of tools and technologies to analyze and process all aspects of information and data of the target enterprise or project, not only relying on the description of the target enterprise or project, but also quantifying and calculating the indicators and parameters of the target enterprise or project through financial models, market forecasts, and technical evaluations, so as to increase the accuracy and comparability of the information and data of commercial due diligence.

Integrated. Commercial due diligence should use a variety of methods and perspectives to synthesize and evaluate all aspects of information and data of the target enterprise or project, not only relying on a single aspect of the target enterprise or project, but also through financial comparison, market analysis, and technological innovation. In order to increase the comprehensiveness and objectivity of the information and data of commercial due diligence.

5.Commercial due diligenceContent

The content of commercial due diligence refers to the basic aspects that should be paid attention to when conducting commercial due diligence to ensure the quality and effectiveness of commercial due diligence. Generally speaking, the content of commercial due diligence can be summarized as follows:

Financial due diligence. Financial due diligence refers to the investigation and analysis of the financial position, financial management and financial risks of the target enterprise or project, which mainly includes the following aspects:

Financial Statements. Financial statements refer to the balance sheet, profit statement, cash flow statement, etc. of the target enterprise or project, reflecting the basic documents of its financial position. Financial due diligence should verify and audit the authenticity, completeness, compliance and consistency of the financial statements, as well as analyze and evaluate the main items and indicators of the financial statements, such as asset-liability ratio, operating income, net profit, cash flow, etc.

Financial policy. Financial policy refers to the basic rules and methods of financial management of the target enterprise or project, such as accounting standards, accounting policies, financial budget, financial control, etc. Financial due diligence should evaluate and compare the reasonableness, effectiveness, and stability of financial policies, as well as analyze and forecast changes and impacts of financial policies, such as accounting differences, financial adjustments, and financial consolidation.

Financial risk. Financial risk refers to the potential problems and disadvantages that may exist in the financial situation and financial management of the target enterprise or project, such as financial fraud, financial loss, financial debt, financial litigation, etc. Financial due diligence should identify and assess the existence, severity and controllability of financial risks, as well as recommendations and measures for the prevention and avoidance of financial risks, such as financial guarantees, financial compensation, financial terms, etc.

Legal due diligence. Legal due diligence refers to the investigation and analysis of the legal situation, legal relations, legal risks, etc. of the target enterprise or project, which mainly includes the following aspects:

Legal qualifications. Legal qualification refers to the legal status and legal capacity of the target enterprise or project, such as the company's registration, license, articles of association, equity, shareholders, directors, etc., reflecting the basic elements of its legitimacy. Legal due diligence should verify and examine the authenticity, validity and legality of legal qualifications, as well as analyze and evaluate the main contents and characteristics of legal qualifications, such as the type, size, structure and change of the company.

legal relationship. Legal relationship refers to the legal rights and legal obligations of the target enterprise or project, such as the signing, performance, modification and termination of the contract, reflecting the basic factors of its rationality. Legal due diligence should evaluate and compare the integrity, validity and reasonableness of legal relations, as well as analyze and evaluate the main types and contents of legal relations, such as the scope, duration, terms and breach of contract.

Legal risks. Legal risk refers to the potential problems and disadvantages that may exist in the legal situation and legal relationship of the target enterprise or project, such as legal violations, legal disputes, legal liability, legal sanctions, etc. Legal due diligence should identify and assess the existence, severity and controllability of legal risks, as well as recommendations and measures for the prevention and avoidance of legal risks, such as legal guarantees, legal compensation, legal provisions, etc.

Tax due diligence. Tax due diligence refers to the investigation and analysis of the tax status, tax management, tax risks, etc. of the target enterprise or project, which mainly includes the following aspects:

Tax Statements. Tax statement refers to the tax return, tax certificate, tax list, etc. of the target enterprise or project, which reflects its tax status. Tax due diligence should verify and audit the authenticity, completeness, compliance and consistency of the tax statements, as well as analyze and evaluate the main items and indicators of the tax statements, such as the amount of tax payable, the amount of tax paid, the amount of tax not paid, the tax rate, etc.

Tax policy. Tax policy refers to the basic rules and methods of tax management of the target enterprise or project, such as tax law, tax system, tax preference, tax planning, etc. Tax due diligence should evaluate and compare the rationality, effectiveness and stability of tax policies, as well as analyze and predict the changes and effects of tax policies, such as tax differences, tax adjustments, tax integration, etc.

Tax Risks. Tax risk refers to the potential problems and disadvantages that may exist in the tax status and tax management of the target enterprise or project, such as tax violations, tax losses, tax arrears, tax penalties, etc. Tax due diligence should identify and assess the existence, severity and controllability of tax risks, as well as recommendations and measures for the prevention and avoidance of tax risks, such as tax guarantees, tax compensation, tax provisions, etc.

The market is adjusted. Market due diligence refers to the investigation and analysis of the market situation, market competition and market potential of the target enterprise or project, mainly including the following aspects:-market size. Market size refers to the overall capacity and demand level of the market in which the target enterprise or project is located, such as market sales, market growth rate, market penetration, etc., reflecting the basic indicators of its market conditions. Market due diligence should verify and verify the authenticity, accuracy and credibility of the market size, as well as analyze and forecast the main factors and trends of the market size, such as the driving force of the market, the bottleneck of the market, the potential of the market, etc. -Market structure. Market structure refers to the internal composition and distribution of the market in which the target enterprise or project is located, such as market segmentation, market concentration, market competition pattern, etc., reflecting the basic characteristics of its market situation. Market due diligence should evaluate and compare the integrity, effectiveness and rationality of the market structure, as well as analyze and evaluate the main types and contents of the market structure, such as market positioning, market advantages, market barriers, etc. -Market strategy. Market strategy refers to the basic direction and method of the operation and development of the target enterprise or project in the market, such as market pricing, market promotion, market channels, market services, etc., reflecting the basic factors of its market situation. Market due diligence should evaluate and compare the rationality, effectiveness, and stability of market strategies, as well as analyze and predict changes and impacts of market strategies, such as market reactions, market opportunities, and market challenges.

Technical adjustment. Technical due diligence refers to the investigation and analysis of the technical status, technical capabilities and technical risks of the target enterprise or project, which mainly includes the following aspects:

technology assets. Technology assets refer to the form and value performance of technology owned or used by the target enterprise or project, such as technology patents, technology software, technology hardware, technology equipment, etc., reflecting the basic elements of its technology status. Technical due diligence should verify and review the authenticity, validity and legality of technical assets, as well as analyze and evaluate the main contents and characteristics of technical assets, such as the scope of technology, the level of technology, and the optimization of technology.

technical ability. Technical capability refers to the ability and level of the target enterprise or project to utilize or develop technology, such as technology research and development, technology innovation, technology application, technology transformation, etc., reflecting the basic factors of its technical status. Technical due diligence should evaluate and compare the rationality, effectiveness and stability of technical capabilities, as well as analyze and predict the changes and impacts of technical capabilities, such as technological progress, technological competition, and technological risks.

Technical risks. Technology risk refers to the potential problems and disadvantages that may exist in the technical status and technical capabilities of the target enterprise or project, such as technology infringement, technology failure, technology obsolescence, technology leakage, etc. Technical due diligence should identify and assess the existence, severity and controllability of technical risks, as well as make recommendations and measures for the prevention and avoidance of technical risks, such as the protection of technology, the renewal of technology, and the transfer of technology.

6.Commercial due diligenceReport

A commercial due diligence report is a document that summarizes and presents the results and recommendations of commercial due diligence after the completion of commercial due diligence, and is the final result and deliverable of commercial due diligence. In general, a commercial due diligence report should include the following sections:

Cover. The cover page refers to the front page of the commercial due diligence report, which contains the basic information of the commercial due diligence report, such as the title of the report, the date of the report, the author of the report, the receiver of the report, etc., as well as the copyright notice and disclaimer of the commercial due diligence report, so as to display and protect the form and content of the commercial due diligence report.

directory. The table of contents refers to the second page of the commercial due diligence report, which contains the titles and page numbers of the main sections and subsections of the commercial due diligence report, as well as the titles and page numbers of the appendices and references of the commercial due diligence report, so as to facilitate the reader to find and read the content and structure of the commercial due diligence report.

[Description]:. [Description]: Refers to the third page of the commercial due diligence report, which contains a brief overview of the main contents and conclusions of the commercial due diligence report, such as the purpose, scope, methods, results, recommendations, etc., so that readers can quickly understand and grasp the value and significance of the commercial due diligence report.

[Contents]:. [Contents]: Refers to the main part of the commercial due diligence report, including the detailed content of the commercial due diligence report and the specific display of the analysis, such as the process, method, content, results, suggestions, etc. of the commercial due diligence, as well as the charts, data, evidence, cases, etc. of the commercial due diligence report, so as to facilitate readers to deeply understand and evaluate the quality and effect of the commercial due diligence report.

Appendix. Appendix refers to the supplementary part of the commercial due diligence report, which contains the auxiliary contents and information of the commercial due diligence report, such as the terms, abbreviations, formulas, algorithms, etc. of the commercial due diligence, as well as the relevant documents, materials, agreements, etc. of the commercial due diligence report, so as to facilitate the reader's reference and verification of the contents and sources of the commercial due diligence report.

References. References refer to the citation part of the commercial due diligence report, including the reference content of the commercial due diligence report and the source and citation method of the information, such as the commercial due diligence literature, report, website, experts, etc., as well as the commercial due diligence citation specification, citation format, citation label, etc., so as to facilitate readers to verify and track the content and basis of the commercial due diligence report.