Corporate Due Diligence

Corporate Due Diligence

Thailand is an excellent location to establish business because it is in the center of Southeast Asia. That is why despite the global challenges, Thailand remains as one of the options for foreigners to consider their future ventures such as working, doing business or even retirement. However, there have been international scammers and syndicates who victimize foreigners which can devastate your business deals. In this diverse society, it is inevitable that at one point in our lives, we will have to conclude or close deals with strangers.  Although in an ideal world, trust should be sufficient, it is difficult, if not outright dangerous, to rely solely on good faith. Whether we are hiring an employee, buying land, contracting out work or closing a contract, it is necessary that we conduct our own due diligence or investigation of the person that we are dealing with.

Due diligence is a precautionary measure conducted before concluding business with another. It can simply refer to investigating the background of a person or company to ensure that such entities are trustworthy.  Thus, before buying land, the buyer usually conducts due diligence on the land and the seller.  In hiring employees, the employer investigates the background of the applicant.  Before signing a contract, both parties conduct due diligence on each other.

Due diligence is very important because it seeks to pacify the parties on uncertainties concerning the transaction.  It ensures that everything is above board and that the transaction will go on smoothly, without troubles ensuing from third parties, encumbrances or other factors which will militate against the adherence of the parties to the contract.  In view of the numerous scams and deceits, due diligence has become commonplace in any business transaction.A due diligence report is an important legal assessment before you pursue purchasing a business in Thailand. This will protect you from fraud and scams.

Therefore, let us define what is due diligence, it is legally a business assessment which covers thorough investigation of businesses focusing on its assets and liabilities recorded from this setting up the company and the present status. This is normally the initial step before contracts will be finalized and signed between the purchaser of business from its seller.

What is covered by Business Due Diligence?

Business Diligence contains the following which are subjected from the agreement between Juslaws and the client which includes:  monetary matters of the company, inflow and outflow of income and pending court cases.

Financial legal assessments to consider annual and quarterly statements, budgets, investments, and tax considerations.

Legal considerations include shareholder’s criminal record, archive of  litigation, and any temporary restraining orders against the company. The financial and legal fitness of an organization matters to you as a buyer.

Personal connections are another important matter that will come into play throughout the course of due diligence.  In some cases, a more extensive background check may be performed to provide information about an employee’s history.

Summary

Our legal and accounting team will focus the review on the following aspects:

  • Accounting policies
  • Accounting systems and controls
  • Assumptions
  • Audit Reports
  • Cash receipt, application, and management
  • Client billing systems
  • Employee expense reimbursements
  • Employee payroll
  • Financial Statements
  • Information systems
  • Internal Audit procedures
  • Inventory ordering, controls, and management
  • Key operational processes
  • Liabilities and potential / contingent liabilities
  • Tax implications of deal structures
  • The quality and sustainability of earnings and cash flow
  • The condition and value of assets