Tax Due Diligence
Tax due diligence is a process by which the tax position of a company as well its current and expected tax situations are analyzed. Past audits as well as reviews and analyses of audit reports are also closely examined. Relevant tax-related influencing factors are ascertained, a risk analysis is conducted and the facts of annual financial statements are accounted for. This examination also contains an analysis of tax risks – also in connection with past amortizations and restructurings – and the annotation of possible effects on the tax situation of the target company or its subsidiaries. Furthermore, an evaluation of the aggregate tax risk is included.
Financial Due Diligence
Financial due diligence means the review of assets, cash flow, revenue, liquidity, financial structure as well as procurement of equity capital and outside capital. It also includes an analysis of the existence and structure of assets, their source, their situation concerning any creditors and debtors, of claims and liabilities, any tax liabilities, solvency, net assets, business activities, dynamics and structure of revenues, overhead costs and of the profit. Furthermore, it includes an evaluation recommendation of the target firm.