Financial due diligence includes an analytical review of a company, analyzing the main challenges affecting the business and the factors behind sustainable income and cash flows, determining the transaction’s primary financial hazards, and possible breakers.

POTENTIAL ISSUES

• You want to improve the core business of your company by acquiring rival products which are nearly identical in function/performance to your own.
• You need to expand on existing activities in your company by buying additional items.
• You want to buy a business in new markets to gain access to its existing goods or to expand the consumer base.
• You need to extend the existing portfolio of goods and services in your business by adding new ones-potentially to provide a buffer against the changes in the markets in which the company operates.
• You want to spread the competition risk of your business by buying a company that sells similar goods or services in another country.

KEY TAKEAWAYS

• The individual investor will perform due diligence on any stock using public information that is readily accessible.
• A lot of other forms of investments will work on the same approach.
• Look at the company’s numbers. Compare the numbers over time. Compare them to their competitors’ numbers.