Due Diligence & Legal Opinion
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Soft and Hard Due Diligence:
There are two type of due diligence: “hard” and “soft” forms of due diligence. Hard due diligence is concerned with the numbers. Soft due diligence is concerned with the people, within the company and in its customer base.
Hard due diligence need the involvement of lawyers, accountants, and negotiators. Typically, hard due diligence focuses on earnings before interest, taxes, depreciation and amortization (EBITDA), the aging of receivables, and payables, cash flow, and capital expenditures.
Other coverage of hard due diligence activities include:
- Reviewing and auditing financial statements
- Validity of business licenses
- Land status and issues
- Financial and tax liabilities/compliance
- Employment (and possible termination) matters
- Scrutinizing projections for future performance
- Value and physical conditions of assets
- Analyzing the consumer market
- Reviewing potential or ongoing litigation
- Evaluating subcontractor and other third-party relationships
Conducting soft due diligence is not an exact science. It focus on how well a targeted workforce will mesh with the acquiring corporation’s culture.
Contact us for further discussion on scope and price.
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