Things to know about business appraisal (Due Diligence)

Business appraisal is an in-depth process to comprehensively assess the capacity, risks and potential of a business organization. This process is intended to help evaluate important aspects such as the financial, legal, and operational situation of the business. Please follow the article to learn more about the business appraisal process as well as the benefits of using professional services from Long Phan.

What is Due Diligence? When should a business appraisal be performed?

• Due Diligence is the process of comprehensively examining, analyzing and evaluating a business to verify information, assess risks and support decision-making in large transactions such as buying and selling, merger, investment or strategic cooperation. This process focuses on important aspects such as finance, legal, business operations, assets, human resources, and market.
• The business appraisal process is carried out in cases such as: mergers and acquisitions (M&A), capital investment, strategic cooperation, capital mobilization or listing on the stock exchange or business restructuring.

Popular forms of business appraisal today

Business appraisal has many forms, applied depending on the goals and areas to be evaluated. The following are common forms of appraisal:

1. Financial Due Diligence

• Financial appraisal aims to evaluate the financial situation of a business, helping to confirm the accuracy of financial reports and profitability.
• This process involves analyzing a business’s revenue, expenses, profits, and cash flow to examine its liabilities, financial obligations, and identify potential problems such as fraud, bad debt, or unpaid taxes. This form is often applied in business mergers and acquisitions or capital investments.

2. Legal Due Diligence

• Centralized legal due diligence ensures that businesses fully comply with legal regulations and do not face legal risks. The process includes checking business licenses, contracts, property ownership, and other legal documents.
• In addition, ongoing or potential legal disputes that may arise are also carefully considered. This form of appraisal is especially necessary when businesses participate in investment, cooperation or acquisition activities.

3. Tax Due Diligence:

• Tax appraisal helps businesses check and evaluate compliance with tax obligations, thereby identifying potential tax risks. This process includes checking tax records, taxes payable, and tax payments. Reduce tax deductions and detect risks related to tax audits or outstanding taxes.
• Tax appraisal is often performed when a business plans to restructure or sell shares.

4. Environmental Due Diligence

• Environmental appraisal aims to ensure that businesses comply with environmental laws and identify risks related to this area.
• The appraisal process includes examining the environmental impact from production activities, waste treatment, and legal risks related to violations of environmental regulations are also evaluated.

5. HR Due Diligence

• Human resource appraisal focuses on evaluating capacity, organizational structure and costs related to human resources. Experts review labor contracts, compensation, and labor disputes (if any). The capacity of the management team is also evaluated to determine the level of compatibility with the business’s development strategy.
• This form is especially important in mergers, investments or corporate restructuring.

What should you keep in mind when performing business appraisal?

When performing business due diligence, the following important legal aspects should be kept in mind to ensure a full assessment of the risks and opportunities involved. Specifically, there are the following issues:

1. Verify ownership and license

This is the first and important step in appraisal. It is necessary to check in detail the business registration certificate, ownership of assets such as real estate, machinery, equipment, as well as intellectual properties such as trademarks, patents, and copyrights. At the same time, ensure that the business has all the necessary operating licenses according to the law.

2. Evaluate contracts and commitments

Review business contracts, including sales contracts, service contracts, and employment contracts. In addition, it is necessary to review loan agreements, business cooperation, and other legal commitments to detect provisions that may lead to disputes or legal risks in the future.

3. Check for legal disputes

Review all records related to lawsuits, complaints, or legal disputes that the business has, is, or may face. Analyze the status of resolving these disputes and assess their impact on the business operations of the enterprise.

4. Ensure legal compliance

Assess the level of compliance of the business with relevant legal regulations, including regulations on tax, labor, environmental protection, and other specialized regulations. This compliance not only protects businesses from administrative penalties but also helps maintain reputation and stability in business operations.

5. Consider liability risks

Analyze potential risks that could lead to future legal liability, such as breach of contract, disputes with customers or partners, or claims from third parties to help businesses identify potential problems in advance and plan for effective prevention.

Benefits of using professional business appraisal services at Long Phan

Business appraisal is an important step that determines success in large transactions such as mergers, acquisitions, investments or business cooperation. Understanding this, Long Phan provides comprehensive appraisal services, helping customers optimize benefits, minimize risks and ensure legal transparency. The following are the benefits when you use our business appraisal service:

1. Experienced professional team

Long Phan is proud to have a team of highly qualified lawyers and experts with extensive knowledge of the fields of law, finance, and business. With rich practical experience, Long Phan has the ability to comprehensively analyze and make an accurate assessment of the legal status and risks of the business.

2. Ensure legal compliance

Long Phan’s appraisal services help businesses identify and handle potential legal issues, ensuring full compliance with current legal regulations. This not only helps businesses avoid legal risks but also creates a solid foundation for sustainable development.

3. Save time and resources

With a professional and systematized working process, Long Phan supports businesses in performing appraisals quickly and accurately, helping you minimize costs and focus resources on core business activities.

4. Provide specific assessments and solutions

Not only stopping at reviewing and analyzing, Long Phan also provides recommendations and practical solutions, helping businesses optimize investment, purchasing or cooperation decisions. This contributes to improving efficiency and minimizing risks in business transactions.

5. Confidentiality of customer information

Long Phan commits to absolute confidentiality of sensitive customer information. All data is carefully processed and stored securely, bringing peace of mind to businesses when using the service.

Consulting services and conducting business appraisal in Long Phan

To help you achieve your goal of making effective investment and cooperation decisions.  Long Phan provides professional business appraisal support and consulting services. Specifically, our services include:

• Consulting and evaluating the legal status of businesses comprehensively, including licenses, documents and compliance with regulations on tax, labor, environmental protection, and other specialized fields.
• Support reviewing contracts and transactions to identify potential risks, terms that are unclear or may be detrimental to the business.
• Support customers in negotiations, agreements, and negotiations with partners during the appraisal process.
• Consulting on the most optimal solutions to handle problems when appraising businesses or optimizing investment, merger and acquisition decisions.
• Continuous support after appraisal, helping businesses solve arising problems quickly and effectively.

With outstanding benefits, Long Phan is a reliable partner, accompanying businesses in the appraisal process and important business activities. For detailed advice and to use business appraisal services, please contact Long Phan via the hotline 0906735386. Long Phan commits to accompanying you in all important business activities.