DUE DILIGENCE IN MERGERS AND ACQUISITIONS

Following the latest technological, social and political developments, our world has now become smaller. Producers and consumers can move between countries according to their needs in a very short time and easily, and this has accelerated company takeovers and acquisitions. This has revealed the need for Due Diligence to be carried out very meticulously.

Due Diligence must first be carried out by a competent and experienced team in this regard, otherwise, unreal asset/liability amounts of the merged/acquired company will be invested.

The Due Diligence process is given briefly below.

1. The legal structure of the company, whether the transactions are legal or not, commitments, etc. should be examined in detail.
2. The company’s existence of a transparent and healthy accounting system, authorizations and internal control mechanisms should be evaluated.
3. Whether taxes, public receivables and obligations to personnel have been fulfilled on time, and whether there are any unpaid debts in this regard should be examined.
4. The trend in the market shares of the products over the years should be examined; is there an outdated product group? How are price comparisons with competitor products over time?
5. In the company’s financial statements, receivables, debts, doubtful parts, the status of profit and equity capital and whether there are healthy figures, stock movement ratios, waste and losses should be examined and analyzed.

Carefully carrying out all of the above-mentioned issues and any additional investigations that may arise during the process will ensure that later disputes between the parties can be prevented from the very beginning.

Ahmet Balta
Certified Public Accountant