Joined: 30 Aug 2008
|Posted: Sun Sep 28, 2008 10:02 am Post subject: TECHNICAL DUE DILIGENCE
TECHNICAL DUE DILIGENCE
Due diligence is a process that critically reviews and analyzes the financial, management and operational conditions of a company, agency or project. This conventional due diligence process usually focuses on the financial and business aspects of a company or project and is most often applied in the evaluation of a potential investment, merger or acquisition. In the conventional due diligence process very little effort is devoted to a critical assessment of the technology associated with the enterprise.
Technical due diligence provides an independent, third party assessment of the underlying technology associated with new and emerging enterprises and projects.
- Technical due diligence benefits include:
- Informed decision making.
- Reduced risk and avoidance of hidden pitfalls.
- More accurate valuations.
- Improved negotiating position.
- Saved time and resources.
- Minimized bad investments.
- Focused market opportunities.
The Norcross Group will conduct an in-depth critical review and verification of the proposed technology. The technology assessment process also includes an analysis of all technical documentation and literature associated with the proposal
- The Norcross Group’s technical due diligence process includes:
- A critical evaluation of the technology plan.
- An analysis of state of the art developments and comparisons.
- A review of related and competitive technologies.
- An evaluation of intellectual property including patenting position and possible infringements.
At the client's request, The Norcross Group will also conduct structured interviews with key personnel.
Upon completion of its technology assessment, The Norcross Group will provide an easy-to-read written report summarizing its technology assessment findings. The written report will include conclusions and recommendations as well as documented references supporting its findings.The Norcross Group due diligence methodology ensures a thorough analysis of the target business. We usually focus on the following key elements of business infrastructure:
- Commercial register extracts and/or any other document showing the incorporation of the Company as well as all subsidiaries or other connected companies;
- Articles of Association or Incorporation Agreement of the Company both the current version and the version of the time of incorporation together with all amendments thereto;
- Details of the participation of the Company's shareholders in other businesses;
- Existing encumbrances on corporate interests of any kind;
- Details concerning the Board of Directors/Advisory Board (if existing) and Supervisory Board (for example, composition, term of office, bonuses, rules of procedure and regulations, etc.);
- Details of the business activities of the Company;
- Obligations as against previous shareholders.
- Contracts with suppliers and customers;
- Consultancy agreements off all kinds;
- Commercial agency agreements and distribution agreements and other similar legal relations of oral or tacit agreements and established practices in relation to thereto;
- Marketing agreements of all kinds;
- Powers of attorney granted (including commercial power of attorney, general power of attorney and a power of attorney to transact certain legal acts);
- Memberships in association;
- Guarantee obligations or security deposits;
- Obligations concerning the granting or taking of credit of all kinds, existing credit relations;
- Rental, leaseholds and leasing contracts;
- List of insurance contracts;
- Real estate sale and purchase contracts which are concluded but not yet (fully) performed;
- Contracts concerning intellectual property rights, know-how, license contracts and similar contracts etc.
- List of employees with details concerning: number of employees, gross salary amount, seniority (tariff level), contractual notice periods, particular agreements, for example, company pension plan, etc;
- Employment agreements with management and senior officers;
- Option or profit sharing schemes, employer pension commitments, insurance obligations by the Company for the management, bonus regulations (number of people, total bonus amount), anniversary bonus, etc;
- Details concerning the council of workers;
- Employment disputes (current or threatened);
- Average sickness leave, frequency of accidents, other absences during the past two years;
- Working environment.
- List of all property owned and leased by the Company, extracts of the land register;
- List of all trademarks, trade names, copyrights, patents, designs and all other intellectual property of the Company and of its subsidiaries;
- Copies of certificates of registration for all intellectual property rights;
- Any pending applications to register trademarks, copyrights, patents or design;
- All documents and other information regarding challenges or claims made by any third-party with regard to the Company;
- List of the existing public approvals, consents, licenses, etc.
- Information regarding all dangerous and poisonous materials or substances that are banned under environmental, health or safety regulations, and or/whose use is limited, and those used, released, or discharged in a given process, and/or are found or stored on the property, in a building, facility, machine, device, instrument, etc;
- Copies of all environmental licenses, approvals, permissions, permits, certificates, specifications, qualifications, notifications, registrations;
- Information regarding violations, if any, against law for the protection of the environment etc.
- List of all liabilities of the Company, including details regarding the nature of liability (loan, purchase agreements, warranties, damages, etc.) term, duration, notice period, due date, interest rate, etc. as of the date of review.
- List of all legal disputes (including proceedings before courts, arbitration tribunals, conciliation boards, authorities) which have been either pending or are currently in existence or are threatened for the future etc.
Balance Sheets and Tax Law Relationships
- Annual financial statements (including auditor's report) for the Company and its subsidiaries, if any, for the last three years;
- Tax Returns for the Company for the last three years including issued official tax assessments;
- Report on the last tax field audits of the Companies' and/or its subsidiaries' accounts
PLANT, PROPERTY AND EQUIPMENT
- Real Property
- Description, location and character of all real property owned
- Material deeds, surveys and other real property title documents
- List of any material real property mortgages which are not disclosed in most recent financial statements
- List of all leased real property, including descriptions, terms of leases, sale and leaseback arrangements, options, annual costs, etc.
- Reporting letters and opinions regarding the acquisition of any material real property
- List of title insurance policies
- Personal Property
- Description, location and character of all personal property owned
- List of all material leased personal property, including descriptions, terms of leases, options, annual costs, etc.
- Description of facilities and plant, including listing of all material fixed assets and accumulated depreciation
- Any available appraisals
Need for Technical due diligence
Details of Plant Property & equipment
Time Frame constraints, if any
Available appraisals, reports if any
Analysis of evaluation of technology with review of related and competitive technologies
Interaction level to conduct structured interviews with key personnel if required by the client.