The Integrity Due Diligence procedure is a series of measures to form an objective understanding of the investment object. At the same time, not only a legal entity can act as such an object, but also claim right, a land plot or a real estate object.
This term first appeared in 1933 in the United States in the law on securities, and modern standards of due diligence were developed in 1977 in Switzerland by a number of banks that signed an agreement establishing a unified approach to collecting information about their customers. This was done in order to avoid strict state regulation of their activities.
Later, the principles outlined in the agreement called the “The Swiss Banks Due Diligence Agreement”, began to be used by the consulting business for a comprehensive analysis of the company’s activities from the point of view of lawyers, auditors and financial analysts. You can learn more about these principles by clicking at the link https://cosa.solutions/solutions/due-diligence-and-compliance/.
Who needs Integrity Due Diligence and why
In the implementation of this procedure, as a rule, the investor is most interested. That is, the one who is going to buy or invest money in a certain company. When making a deal, especially a large one, it is very important to have comprehensive information about the object of financing, its real value and possible legal and tax consequences.
The number of people interested in conducting Integrity Due Diligence, in addition to external investors, includes shareholders of the company, as well as its top managers. Indicators obtained as a result of this procedure may subsequently assist in the preparation of an issue of securities or the development of a mechanism for protection of a company.
Also, the procedure is desirable in the following cases:
- a change in the company status due to takeover or merger;
- a change of top management structure;
- getting help from sponsors;
- receiving loans;
- seizure of assets and other cases.
More details about cases of its use can be found here https://cosa.solutions/solutions/strategic-intelligence/.
Who can perform the procedure
In order to save money, some companies conduct Integrity Due Diligence with their own resources attracting specialists from their units. However, independent conducting is advisable only in small companies. This approach has the following disadvantages:
- distraction of employees from operational tasks;
- the possibility of conducting only when acquiring a business in a similar field of activity;
- risk of a biased attitude to the facts.
A more reliable option is to invite experts from third-party companies, such as https://cosa.solutions/. Integrity Due Diligence services are provided by large international and regional companies, as well as small consulting firms. The advantage of an integrated approach is that the whole package of services is provided to the client by high-classed professionals.