Due Diligence.pptx
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The document provides an overview of the importance of due diligence in mergers and acquisitions (M&A), highlighting the differences between mergers and acquisitions and the necessity for thorough investigation of assets and liabilities. It emphasizes the negative consequences of insufficient due diligence, illustrated by the case of Dai-ichi Sankyo and Ranbaxy, where lack of proper evaluation led to significant financial losses. The conclusion stresses that careful due diligence is crucial for maximizing the chances of success in M&A transactions.
Due Diligence.pptx
- 1. OVERVIEW OF DUE DILIGENCE IN MERGERS AND ACQUISITIONS â‚ą â‚ą Presented by: Navya Chopra
- 2. BACKGROUND WHAT ARE MERGERS AND ACQUISTIONS In a merger, one firm combines with another and loses ownership, while another dominating corporation obtains higher value and can absorb or merge with another But in an acquisition, the receiving company buys the interests of acquired shareholders and ceases to have an interest.
- 3. INTRODUCTION WHAT IS DUE DILIGENCE IN MERGERS AND AQUISTIONS Due diligence is the process of thoroughly evaluating commercial agreements from a variety of perspectives before making a final choice. This is more of an investigation procedure for evaluating assets and liabilities, and it also looks into the potential commercial as well as economic worth of the Company or firm where due diligence is necessary.
- 4. NEED FOR DUE DILIGENCE Dai-Ichi Sankyo first paid Ranbaxy $4.6 billion for 63 percent of company stock, but then wrote down the value of the deal by $3.6 billion. The reason for this is because when Ranbaxy was directed to shut down all of its pending and prospective medication applications from its Ponta Sahib factory in 2009, they were never fully informed of the scope of the Food and Drug Administration's (FDA) investigation. The first-to-file atorvastatin, which had piqued Dai Ichi's interest, was riddled with issues. Dai-Ichi ended up losing a lot of money since they didn't do enough due diligence. Case Study: Dai-Ichi Sankyo and Ranbaxy Due diligence is an important part of M&A deals since it helps purchasers locate the elements of the firm that they want to buy. It aids the consumer in comprehending the numerous interactions, the business's growth potential, and its ability to attract additional clients. Adequate due diligence also aids the customer in increasing his possibilities of making money and minimising his losses.
- 5. 1 3 Questionnaire Review 2 Representations and Warranties DUE DILIGENCE PROCESS INFORMATION COLLECTED THROUGH: INFORMATION ANALYSED 1. 2. Data Room Approach Submission via Questionnaire
- 6. Preparation and conduct of the preliminary inquiry Team Selection Due Diligence Report Initial Parameters 1. 2. 3. 4. Statement or Certificate 5. DUE DILIGENCE: CHECKLIST
- 7. IN LEGISLATION “an investment firm must conduct proper due diligence on the target business before investing. “ Nirma Industries and Another v. Securities Exchange Board of India “the Board participation needs to be carefully planned and structured when a major corporate transaction such as the sale of the company needs to be made “ Smith v. Van Gorkom India: SEBI + Companies Act, 2013
- 8. THE NEED TO DISCUSS THIS TOPIC PREVENTION IS BETTER THAN CURE. As the realm of M&A is explored more and more everyday, it becomes necessary so as to understand the process of M&A as it provides a way to swifly expand business. While understanding the M&A process, it becomes imperative to understand the importance of due diligence in it. Due diligence is the investigation procedure for evaluating assets and liabilities, and it also looks into the potential commercial as well as economic worth of the Company or firm where due diligence is necessary. The various case study models musr also be analysed and studied so as to learn exactly what to do (successes) and what not to do (failures).
- 9. • Hence, any and all M&A deals require a thorough due diligence procedure to be successful. • It is increasingly being required to determine if the deal's planned value can be realised, whether the predicted timescale can be met, and whether the related risks can be efficiently handled. • It must be meticulously supervised and monitored in order to maximise the deal's chances of success. CONCLUSION