Definition of 1. investment due diligence advice

Investment due diligence consulting (Investment Due Diligence Consulting) refers to a comprehensive, in-depth and independent evaluation and analysis of the financial, legal, commercial, tax, environmental, social and governance (ESG) aspects of the investment target before making an investment decision, in order to reveal its true value, risks and opportunities, and provide professional advice and support to investors. Investment due diligence consulting is an important part of investment management, the necessary due diligence (Due Diligence) work performed by investors before investing, and the basis for the ongoing due diligence (Due Care) work performed by investors after investing.

The object of investment due diligence consultation can be various types of investment targets, including but not limited to equity investment, debt investment, project investment, merger and acquisition investment, fund investment, real estate investment, financial derivatives investment, etc. The subject of investment due diligence advice can be various types of investors, including but not limited to private equity funds, venture capital funds, hedge funds, sovereign wealth funds, pension funds, insurance companies, banks, trust companies, family offices, high net worth individuals, etc. The service providers of investment due diligence consulting can be various types of investment advisers, including but not limited to accounting firms, law firms, management consulting firms, investment banks, evaluation companies, research institutions, etc.

Purpose of 2. Investment due diligence advice

The main purpose of investment due diligence consulting is to provide investors with the information and suggestions needed for investment decisions, help investors identify and evaluate the value, risks and opportunities of investment targets, formulate reasonable investment strategies and plans, and optimize investment structure and terms. Reduce investment costs and risks, improve investment returns and efficiency, and achieve investment goals and values. Specifically, the objectives of investment due diligence advice include the following:

(1) Determine the authenticity and legality of the subject matter of the investment. Investment due diligence consultation can help investors verify the existence, legality, completeness and validity of the investment target, avoid investors being misled by false, illegal, incomplete or invalid information, prevent the risk of investment fraud and default, and protect the legitimate rights and interests of investors.

(2) Assess the value and quality of the subject matter of the investment. Investment due diligence consultation can help investors analyze the financial status, operating status, market status, competition status, development status, innovation status, etc. of the investment target, and objectively and comprehensively evaluate the value and quality of the investment target from multiple angles and dimensions, To provide a basis for investors to determine the reasonable valuation and price of the investment target.

(3) Identify the risks and problems of the underlying investment. Investment due diligence consultation can help investors find potential or existing risks and problems of the investment target, including but not limited to financial risk, legal risk, commercial risk, tax risk, environmental risk, social risk, governance risk, compliance risk, reputation risk, strategic risk, technology risk, human resource risk, market risk, policy risk, etc, for investors to develop risk prevention and resolution measures to provide reference.

(4) Grasp the opportunities and potential of the investment target. Investment due diligence consulting can help investors explore the future development prospects and growth potential of the investment target, discover the advantages and characteristics of the investment target, capture the opportunities and space of the investment target, and provide guidance for investors to formulate investment appreciation and exit strategies.

(5) Optimize investment decisions and trading arrangements. Investment due diligence consulting can help investors make appropriate investment decisions and transaction arrangements based on the value, risks and opportunities of the investment target, combined with the investor's investment objectives, investment preferences, investment capabilities, etc., including but not limited to selecting appropriate investment methods, Investment timing, investment period, investment amount, investment structure, investment terms, etc., in order to achieve investment optimization.

Content of the 3. Investment due diligence consultation

The content of investment due diligence consultation will vary and be adjusted according to the type, industry, scale and region of the investment target, as well as the needs, objectives and strategies of investors, but generally includes the following aspects:

(1) Financial due diligence consulting. Financial due diligence consulting refers to the review and analysis of the financial position, financial management, financial risks, etc. of the subject matter of the investment, which mainly includes the following aspects:

The truthfulness, completeness, accuracy and compliance of the financial statements, as well as the reasonableness of the principles for the preparation of the financial statements, accounting policies and accounting estimates;

The structure, nature, value and risk of assets and liabilities, as well as the recognition, measurement and disclosure of assets and liabilities.

Whether the structure, nature, level and fluctuation of income and expenditure, as well as the recognition, measurement, disclosure and adjustment of income and expenditure are reasonable;

-The structure, nature, level and volatility of cash flows, as well as the reasonableness of the sources, uses and influencing factors of cash flows;

-The level and trend of financial indicators such as profitability, solvency, operational capacity and growth capacity, as well as the reasonableness of the calculation of financial indicators, comparative benchmarks, industry averages, etc;

-The reasonableness of the assumptions, methods, results and reliability of the financial projections, as well as the consistency, reasonableness and feasibility of the financial projections;

-Whether the type, extent, impact and response to financial risks, including but not limited to asset impairment, bad debts, inventory backlogs, tax disputes, litigation arbitration, internal control deficiencies, fraud, etc., are reasonable.

The purpose of financial due diligence consulting is to provide investors with information and evaluation on the financial authenticity, financial soundness and financial sustainability of the investment target, to provide a basis for investors to determine the financial value and financial risk of the investment target, and to provide support for investors to make investment decisions and trading arrangements.

(2) Legal due diligence advice. Legal due diligence consultation refers to the review and analysis of the legal status, legal relationship, legal risk, etc. of the subject matter of the investment, which mainly includes the following aspects:

-Whether the legal procedures such as the establishment, change and cancellation of the legal subject of the investment object are legal and effective, and whether the equity structure, shareholder relationship and shareholder rights and obligations of the legal subject of the investment object are clear and clear;

-Whether the ownership, right of use and disposition of the legal assets of the subject matter of the investment are legal and valid, and whether the registration, mortgage, pledge, lease and transfer of the legal assets of the subject matter of the investment are clear and clear;

-Whether the legal procedures such as the signing, performance, modification and termination of the legal contract of the subject matter of the investment are legal and effective, and whether the main terms, rights and obligations, liability for breach of contract, etc. of the legal contract of the subject matter of the investment are clear and clear;

-Whether the legal procedures such as the application, acquisition, change and continuation of the legal license of the investment target are legal and effective, and whether the validity period, scope, conditions and restrictions of the legal license of the investment target are clear and clear;

-Whether the legal procedures such as the occurrence, handling and settlement of the legal disputes of the investment target are legal and effective, and whether the causes, nature, results and impact of the legal disputes of the investment target are clear and clear.

The purpose of legal due diligence consultation is to provide investors with information and evaluation on the legal compliance, legal integrity and legal security of the investment target, to provide a basis for investors to determine the legal value and legal risk of the investment target, and to provide support for investors to make investment decisions and trading arrangements.

(3) Commercial due diligence consultation. Commercial due diligence consulting refers to the review and analysis of the business condition, business relationship, business risk, etc. of the investment target, which mainly includes the following aspects:

-The definition, composition, characteristics and advantages and disadvantages of the business model of the investment target, as well as whether the innovation, replicability and scalability of the business model of the investment target are reasonable;

-Analysis of the market environment of the investment target, including but not limited to whether the market size, market structure, market demand, market supply, market trend, market opportunity, market threat, etc. are reasonable;

-Analysis of the competitive environment of the investment target, including but not limited to whether the number, scale, position, strategy, advantages, disadvantages, dynamics, etc. of competitors are reasonable;

-Analysis of the customer environment of the investment target, including but not limited to whether the number, size, type, demand, satisfaction, loyalty, conversion rate, retention rate, etc. of customers are reasonable;

-Analysis of the supply chain environment of the investment target, including but not limited to whether the number, scale, type, quality, stability, collaboration, bargaining power, etc. of suppliers are reasonable;

-Analysis of the product or service of the investment target, including but not limited to whether the type, function, quality, price, cost, gross profit margin, sales volume, market share, brand awareness, brand image, etc. of the product or service are reasonable;

-Analysis of the marketing strategy of the investment target, including but not limited to product strategy, price strategy, channel strategy, promotion strategy, advertising strategy, public relations strategy, etc. is reasonable;

-Analysis of the organizational structure of the investment target, including but not limited to whether the organizational level, department, function, process, culture, atmosphere, etc. are reasonable;

-Analysis of the human resources of the investment target, including but not limited to whether the number, scale, type, quality, ability, incentive, welfare, mobility, etc. of employees are reasonable.

The purpose of commercial due diligence consulting is to provide investors with information and evaluation on the commercial authenticity, commercial soundness and commercial sustainability of the investment target, to provide a basis for investors to determine the commercial value and commercial risks of the investment target, and to provide support for investors to make investment decisions and trading arrangements.

(4) Tax due diligence consultation. Tax due diligence consulting refers to the review and analysis of the tax status, tax management, tax risks, etc. of the subject matter of the investment.

The purpose of tax due diligence advice is to provide investors with information and evaluation on the tax compliance, tax integrity and tax security of the investment target, to provide a basis for investors to determine the tax value and tax risk of the investment target, and to support investors in making investment decisions and trading arrangements.

(5) Environmental, Social and Governance (ESG) due diligence consulting. Environmental, social and governance (ESG) due diligence consulting refers to the review and analysis of the environmental, social and governance aspects of the investment target, including the following aspects:

-The environmental status of the investment target, including but not limited to whether the energy consumption, waste gas discharge, waste water discharge, solid waste treatment, noise control, ecological protection, etc. of the investment target comply with relevant laws and regulations, industry standards, social expectations, etc;

-The social status of the investment target, including but not limited to whether the employee rights, employee benefits, employee training, employee participation, employee satisfaction, etc. of the investment target comply with relevant laws and regulations, industry standards, social expectations, etc;

-The status of the governance of the investment target, including but not limited to whether the shareholder governance, board governance, executive governance, internal control, information disclosure, anti-corruption, etc. of the investment target comply with relevant laws and regulations, industry standards, social expectations, etc;

-The impact of the environmental, social and governance aspects of the investment target, including but not limited to the impact of the performance, contribution, improvement and innovation of the environmental, social and governance aspects of the investment target on the operation, development, competition and reputation of the investment target;

-Environmental, social and governance risks of the investment target, including but not limited to non-compliance, imperfection, insecurity and other risks to the operation, development, competition and reputation of the investment target.

The purpose of environmental, social and governance (ESG) due diligence consulting is to provide investors with information and evaluation of the environmental, social and governance aspects of the investment target, to provide investors with a basis for determining the value and risk of the environmental, social and governance aspects of the investment target, and to support investors in making investment decisions and trading arrangements.

4. approach to investment due diligence advice

The method of investment due diligence consultation will vary and be adjusted according to the type, industry, scale and region of the investment target, as well as the needs, objectives and strategies of investors, but generally includes the following steps:

(1) Determine the scope, content, standards, time, resources, etc. of investment due diligence consulting, communicate and coordinate with investors and related parties of investment targets, sign investment due diligence consulting agreements and confidentiality agreements, and clarify investment due diligence consulting Purpose, objectives, responsibilities, obligations, etc.

(2) Collect relevant information on investment targets, including but not limited to financial statements, legal documents, business plans, market research, product introduction, organizational structure, personnel list, tax declaration, environmental assessment, social responsibility report, governance norms, etc., sort out and analyze relevant information on investment targets, and form a preliminary report for investment due diligence consultation.

(3) Interviews and investigations with relevant parties of the investment target, including but not limited to the management, employees, customers, suppliers, competitors, industry experts, government agencies, social organizations, etc. of the investment target, record and analyze the opinions and feedback of relevant parties of the investment target, and form an interim report of investment due diligence consultation.

(4) Inspect and verify the site of the investment target, including but not limited to the production facilities, office space, warehousing and logistics, sales channels, R & D centers, service outlets, etc. of the investment target, observe and inspect the site conditions and problems of the investment target, and form the final report of investment due diligence consultation.

(5) Summarize and evaluate the results of investment due diligence consultation, including but not limited to comprehensive and quantitative evaluation of the value, risks and opportunities of the investment target, systematic and dynamic analysis of the advantages and disadvantages and threat opportunities of the investment target, and predict and deduce the development prospect and growth potential of the investment target, so as to form the final report of the investment due diligence consultation.

(6) Present and discuss the final report of the investment due diligence consultation, communicate and communicate with investors and relevant parties of the investment target, explain and explain the methods, processes, results and suggestions of the investment due diligence consultation, answer and solve the questions and problems of the investment due diligence consultation, and provide investment due diligence consultation services and support for investors and relevant parties of the investment target.

5. the value of investment due diligence advice

The value of investment due diligence consulting is mainly reflected in the following aspects:

(1) Investment due diligence consulting can help investors improve the success rate and rate of return on investment, reduce the failure rate and risk rate of investment, and realize the value creation and value protection of investment.

(2) Investment due diligence consulting can help investors optimize investment decisions and transactions, improve the efficiency and effectiveness of investment, and achieve the optimization and maximization of investment.

(3) Investment due diligence consulting can help investors fulfill their fiduciary and social responsibilities, improve the transparency and credibility of their investments, and achieve the legitimacy and compliance of their investments.

(4) Investment due diligence consulting can help investors enhance the competitiveness and influence of investment, improve the visibility and reputation of investment, and achieve the sustainability and sustainability of investment.

Investment due diligence consulting practice of 6. Shangpu Consulting Group

Shangpu Consulting Group (Shangpu Consulting Group) is a professional investment due diligence consulting service provider, with rich investment due diligence consulting experience and ability, for all types of investors and investment targets to provide a full range of investment due diligence consulting services to help clients achieve investment success and value. The following is the investment due diligence consulting practice of the Champ Consulting Group.

-Shangpu Consulting Group provides an American private equity fund with investment due diligence consulting services for a Chinese e-commerce company, covering financial, legal, commercial, tax, ESG and other aspects, helping clients evaluate the value, risks and opportunities of the investment target, formulate reasonable investment strategies and plans, and successfully complete the acquisition of the company, achieve a high return on investment and low risk.

-Shangpu Consulting Group provides a Japanese venture capital fund with investment due diligence consulting services for a Chinese new energy vehicle company, covering financial, legal, commercial, tax, ESG and other aspects, helping customers analyze the market environment, competitive environment, technological innovation, development potential, etc. of the investment target, and formulate appropriate investment methods and opportunities, successfully completed the strategic investment in the company, realizing the value-added and exit of the investment.

-Shangpu Consulting Group provides a British sovereign wealth fund with investment due diligence consulting services for a Chinese real estate development company, covering financial, legal, commercial, tax, ESG and other aspects, helping clients identify the advantages and characteristics of the investment target, capture the opportunities and space of the investment target, and formulate the appropriate investment period and amount, the project investment in the company was successfully completed, and the investment was stable and sustainable.

-Shangpu Consulting Group provides a German pension fund with investment due diligence consulting services for a Chinese medical and health company, covering financial, legal, commercial, tax, ESG and other aspects, helping clients to evaluate the quality and safety of the investment target, find the problems and risks of the investment target, and formulate reasonable risk prevention and resolution measures, successfully completed the M & A investment in the company, achieving compliance and security of the investment.

-Champ Consulting Group provides a French family office with investment due diligence consulting services for a Chinese cultural and entertainment company, covering financial, legal, commercial, tax, ESG and other aspects, helping clients to explore the development prospects and growth potential of investment targets, discover the innovation and differentiation of investment targets, and formulate appropriate investment value-added and exit strategies, successfully completed the fund investment in the company, achieving diversification and balance of investment.

The investment due diligence consulting service of Shangpu Consulting Group provides customers with comprehensive, in-depth and independent investment due diligence consulting reports with professional knowledge, rich experience, efficient methods and high-quality services. it provides strong support and guarantee for customers' investment decisions and transaction arrangements, and has won the trust and praise of customers, it has established a good brand image and market position of Shangpu Consulting Group in the field of investment due diligence consulting.

7. epilogue

Investment due diligence consulting is a key factor in the success of investment, and it is also an important means for investors to fulfill their fiduciary responsibilities, protect and improve investment returns, and achieve sustainable development. Investment due diligence advice covers financial, legal, commercial, tax, ESG and other aspects, and requires close cooperation and coordination between investors and investment advisers to ensure the quality and effectiveness of investment due diligence advice. As a professional investment due diligence consulting service provider, Shangpu Consulting Group is committed to providing customers with a full range of investment due diligence consulting services to help customers achieve investment success and value.