Due diligence is a way of preventing unnecessary harm to either party involved in a transaction.

Mergers & Acquisitions has been the driving force behind DDR. Due to globalization coupled with variety of other factors, India has entered into an era of mergers and acquisitions. Some of the reasons for which a DDR may be carried out are as follows:

  1. Potential Acquisition

  2. Merger

  3. Granting loan for projects

  4. Venture Capital investment

DDR is not, by itself, an audit. It is much broader than audit and is business oriented rather than accounting oriented. It should be borne in mind that a DDR requires skills that go beyond conventional audit. An understanding of the business, the pattern and trends in the business line, and estimation of risk – all these are called for from the firm conducting the Review.


  1. To assess the commercial and technical feasibility, resource availability of the business and synergy between the organisation

    (acquirer & target).

  2. To ensure the compliance of necessary statutes and ascertain the liability in the event of non-compliance.

  3. To finalise

    the value of the acquisition or a financial investment.

  4. Look at tax position/structure and its implications

  5. Look for overvalued assets or under recorded

    liabilities, hidden assets or liabilities.

  6. Assess the quality of management and identifying key employees of the Target Company.

  7. To prepare a post-acquisition plan.

  8. Look into any other significant matters of interest to the acquirer.

  9. Provide value added

    information about the target’s business.


There are several types of DDR, which are as listed below:

  1. Business/Market Due Diligence

  2. Technical Due Diligence

  3. Human Resource Due Diligence

  4. Legal Due Diligence

  5. Environment Due Diligence

  6. System Due Diligence

  7. Tax Due Diligence

Financial & Accounting Due Diligence