Before making an investment decision, investors usually need to invest in the target enterprise or project, that is, a comprehensive, in-depth and objective assessment and analysis of all aspects of the target enterprise or project, including financial situation, market prospects, competitive advantages, operational capabilities, legal risks, environmental social responsibility, etc. The purpose of investment due diligence is to verify the authenticity and rationality of the target enterprise or project, identify potential opportunities and challenges, determine investment value and risks, and formulate appropriate investment strategies and programs.

Investment due diligence is a complex and professional job that requires a professional team and methods to perform. In general, investment due diligence can be divided into the following steps:

Determine the scope and objectives of due diligence. According to the needs and objectives of investors, determine what aspects of the target enterprise or project need to be adjusted, as well as the depth and breadth of the adjustment. For example, if investors want to acquire an enterprise, they need to make a comprehensive due diligence on the financial situation, market position, core competitiveness, operational efficiency, legal compliance, etc. of the enterprise; if investors want to participate in a project, then they need to make special due diligence on the market demand, technical feasibility, cost-benefit analysis, etc. of the project.

Collect and review relevant information. Collect and review relevant information provided by the target enterprise or project, including financial statements, market reports, contract agreements, legal documents, etc., according to the scope and objectives of due diligence. At the same time, it is also necessary to obtain more information through third-party channels, such as industry associations, government departments, customer suppliers, etc. In the process of collecting and reviewing information, it is necessary to pay attention to the authenticity, completeness and timeliness of the information, and communicate with the target company or project in a timely manner to solve questions and problems.

Analyze and evaluate relevant information. Based on the information collected and reviewed, analyze and evaluate all aspects of the target enterprise or project, including financial analysis, market analysis, competitive analysis, operational analysis, legal risk analysis, environmental and social responsibility analysis, etc. In the process of analysis and evaluation, professional methods and tools are required, such as financial ratio analysis, market demand forecasting,SWOTanalysis,PESTanalysis, risk matrix, etc., as well as reference to industry standards and best practices. At the same time, it is also necessary to combine the expectations and objectives of investors, comprehensive evaluation and comparison, to determine the investment value and risk level of the target enterprise or project. 4. Form and submit due diligence reports. According to the results of analysis and evaluation, form and submit due diligence reports, summarize and present all aspects of the target enterprise or project, and put forward investment suggestions and plans. The due diligence report should contain the following elements: due diligence purpose and scope, due diligence methods and processes, due diligence results and assessments, investment recommendations and programmes, due diligence constraints and assumptions, etc. The due diligence report should clearly, accurately, completely and objectively reflect the real situation of the target enterprise or project, as well as the judgment and decision-making of investors.

The above is the basic process and method of investment due diligence, but the specific content and method of due diligence may vary according to different investment types and industry characteristics. Therefore, when investors make investment due diligence, they need to choose the appropriate due diligence team and method according to their own situation and needs to ensure the effect and efficiency of investment due diligence.

In order to better illustrate the importance and practice of investment due diligence, we take Shangpu Consulting as an example to introduce some examples of investment due diligence services they provide to clients.

Case 1: An international fund's investment in China's new energy vehicle market.

Background: An international fund wants to make strategic investment in China's new energy vehicle market, but lacks in-depth understanding of the development trend, competition pattern and policy environment of China's new energy vehicle market.

Services: Champ Consulting provides the fund with comprehensive new energy vehicle market investment due diligence services, including the following:

The scale, growth rate, structure, driving factors and restricting factors of China's new energy vehicle market are analyzed in detail, and the market development trend in the next five years is predicted.

The competition pattern of China's new energy vehicle market is analyzed in depth, and the market share, product line, technical level, channel layout and brand image of the main competitors are evaluated.

The policy environment of China's new energy vehicle market is comprehensively combed, and the impact and opportunities of policy on market development are analyzed.

A systematic study of consumer demand and behavior in China's new energy vehicle market is carried out, and consumer preferences, motivations, and barriers are identified.

The potential investment opportunities in China's new energy vehicle market are screened and evaluated, and investment strategies and solutions for different market segments and different competitors are proposed.

Results: Through the investment due diligence service of Shangpu Consulting, the fund has a comprehensive and in-depth understanding of China's new energy vehicle market, clarified its investment goals and directions, and successfully achieved strategic investment in China's new energy vehicle market. And obtained a good return on investment.

Case 2: A domestic listed company's merger and acquisition of a medical device company.

Background: A domestic listed company wants to expand its business scope and market share through mergers and acquisitions of a medical device company, but it lacks sufficient grasp of the financial status, market position, core competitiveness, and legal risks of the medical device company.

Services: Champ Consulting provided the listed company with professional M & A due diligence services, including the following:

The financial situation of the medical device enterprise was strictly audited and analyzed, and some potential financial risks and problems were found.

The market position of the medical device company was objectively evaluated, and its market share, growth rate and profit rate in different market segments and different regions were analyzed.

The core competitiveness of the medical device enterprise is analyzed in depth, and its advantages and disadvantages in product innovation, technology research and development, brand building, channel expansion and so on are identified.

The legal risks of the medical device enterprise were comprehensively investigated and evaluated, and the corresponding risk prevention and avoidance measures were put forward.

Results: Through the M & A due diligence service of Shangpu Consulting, the listed company has a clear and accurate understanding of the medical device enterprise, determines the reasonable M & A price and conditions, successfully completes the M & A transaction, and realizes the rapid integration and coordination of the business.

The above are two cases of investment due diligence services provided by Shangpu Consulting for clients. It can be seen that investment due diligence depends not only on financial data, but also on market prospects, competitive advantages, operational capabilities, legal risks, environmental and social responsibilities, etc. Various factors, as well as potential opportunities and challenges. Only through comprehensive and in-depth investment due diligence can we effectively reduce investment risk, increase investment returns and achieve investment success.