1. determination of due diligence objectives and scope

The first step in commercial due diligence is to determine the objectives and scope of due diligence, I .e. to clarify the purpose, object and content of due diligence. This step is the basis and premise of commercial due diligence, and it is also a key factor affecting the effectiveness and efficiency of due diligence. The objectives and scope of due diligence should be comprehensively considered and determined according to the type, scale, background, risk and other factors of the specific transaction or cooperation, so as to avoid being too broad or too narrow, so as to ensure the pertinence, comprehensiveness and feasibility of due diligence.

For example, Champu Consulting, which provided commercial due diligence services to a European auto parts manufacturer, plans to acquire a Chinese auto parts supplier to expand its share and influence in the Chinese market. When determining the target and scope of due diligence, Shangpu Consulting Company first made it clear that the purpose of due diligence is to provide value assessment and risk identification for the acquisition transaction, and the target of due diligence is China's auto parts suppliers and their related market, competition, customers, supply chain, technology, quality, environment, law and other aspects, the content of due diligence is to conduct a comprehensive, in-depth and systematic investigation and analysis of the supplier's business status, financial status, legal status, etc., as well as to evaluate and predict its competitiveness, development potential, and compliance in the Chinese market.

2. development of due diligence plans and arrangements

The second step in business due diligence is to develop due diligence plans and arrangements, I .e., to identify the time, people, methods, processes, standards, tools and other elements of due diligence. This step is the guidance and guarantee of commercial due diligence, and it is also an important means to improve the quality and efficiency of due diligence. The plan and arrangement of due diligence should be reasonably designed and optimized according to the goal and scope of due diligence, the difficulty and complexity of due diligence, and the resources and conditions of due diligence, so as to ensure the controllability, coordination and flexibility of due diligence.

For example, when making the due diligence plan and arrangement, Shangpu Consulting Company first determines the due diligence time as two months. The due diligence personnel are the due diligence team composed of the general manager of Shangpu Consulting Company in China, automobile industry experts, financial experts, legal experts and so on. The due diligence method is to adopt various means such as desktop research, on-site investigation, data analysis, model establishment and so on, the process of due diligence is based on the division of labor and collaboration in different areas such as commercial due diligence, financial due diligence, legal due diligence, etc. The standard of due diligence is to follow the internationally accepted due diligence standards and industry practices, and the tools of due diligence are the use of due diligence software and databases independently developed by Shangpu Consulting.

3. collection and analysis of due diligence information

The third step in commercial due diligence is the collection and analysis of due diligence information, I .e., the acquisition and processing of the information and data required for due diligence. This step is the core and key of commercial due diligence, and it is also an important link to demonstrate the ability and level of due diligence. The data collection and analysis of due diligence should be effectively implemented and monitored according to the due diligence plan and arrangement, the object and content of the due diligence, the source and channel of the due diligence, so as to ensure the accuracy, completeness and timeliness of the due diligence.

For example, when collecting and analyzing due diligence data, Shangpu Consulting first obtains its basic information, organizational structure, main products, main customers, main suppliers, main benchmark enterprises, financial statements, legal documents and other information from the information provided by suppliers, and then through desktop research and on-site research, it further collects the suppliers' market share, market growth rate, market trend, product quality, product innovation, customer satisfaction, supply chain efficiency, technical ability, quality management, environmental management, legal compliance and other information, and finally quantifies and evaluates the suppliers' business status, financial status and legal status through data analysis and model establishment, as well as its competitiveness, development potential and compliance in the Chinese market are predicted and inferred.

4. preparation of due diligence reports and recommendations

The fourth step in business due diligence is to write a due diligence report and make recommendations, I .e. summarize and present the results and conclusions of the due diligence. This step is the output and delivery of commercial due diligence and an important way to demonstrate the value and impact of due diligence. The report and recommendations of the due diligence should be accurately written and expressed according to the objectives and scope of the due diligence, the information and analysis of the due diligence, and the readers and users of the due diligence, so as to ensure the clarity, logic and persuasiveness of the due diligence.

For example, when writing the due diligence report and making recommendations, Champu Consulting Company first outlines the background, purpose, object, scope, method, process, etc. of due diligence, and then introduces in detail the data and the results and conclusions of the analysis from different angles such as commercial due diligence, financial due diligence and legal due diligence, as well as the evaluation and prediction of the supplier's value, risk and potential, and finally, according to the purpose and objectives of the due diligence, the suggestions and opinions on the feasibility, rationality and optimization of the acquisition transaction, as well as the subsequent management and integration of the acquisition transaction are put forward. The format of the due diligence report is a PDF file, 50 pages in length, with detailed appendices and references.

Conclusion

Business due diligence is a complex and important task that requires professional knowledge, skills and experience, as well as effective methods, processes and tools. Based on some specific cases in the process of providing commercial due diligence services to customers, this paper makes a detailed introduction and analysis of the process and stages of commercial due diligence, as well as the main steps of due diligence, hoping to provide some useful reference and enlightenment for readers. Of course, the practice of commercial due diligence is diverse and dynamic, and needs to be flexibly adjusted and innovated according to different situations and needs. As a professional business consulting company, Shangpu Consulting has rich experience and resources in business due diligence, and can provide customers with customized business due diligence services to help customers achieve the success of business transactions or cooperation.