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by in Blog

DUE DILIGENCE

At Silvana & Associates, we offer proficient, quality, timely and credible due diligence services for businesses, individuals and companies in Kenya.

Due diligence involves a comprehensive appraisal of a potential business venture to reveal potential legal liabilities and fiscal feasibility of a particular transaction.

It is gears towards a “know your customer/client” model before undertaking a transaction with them.

Due diligence is essential in transactions such as;

  • Mergers and Acquisitions
  • Takeovers
  • Investing in a business

In real estate/ Purchasing property/investing in real estate

  • Issuing financial assistance/loans to a business
  • Undertaking mega projects such as construction
  1. Types of due diligence
  • Corporate/commercial due diligence
  • Financial due diligence
  • Legal due diligence
  • Checklist for due diligence
  • Corporate due diligence.

When conducing due diligence on a company:-

  • Review the Incorporation documentation
  • Review the List of directors
  • Review the ownership and structure- shareholders and stockholders.
  • Review the Company by laws, articles of association  and memorandum of association
  • Review the Minutes of the Board and minutes of shareholders for the last 3 years
  • Review the tax documentation including copies of all tax returns, tax audits for purposes of reviewing all the taxes the company is required to pay.
  • Review the Financial records: annual returns and financial statements to assess the financial health of the company.
  • Review all Contracts entered into by the company and third parties.
  • Review the Human Resource- organizational chart, list of all employees, their job descriptions, salaries, performance.
  • Review the Intellectual property of the Company including patents, trademarks, copyrights, licensing or franchise agreements.
  • Review their Customer lists and transactions to identify who the company’s customers are, the types of business they transact and whether they are involved in any illegal activities such as money laundering, human trafficking, terrorism etc.
  • Review of all litigation- pending and previous against the company.
  • Legal due diligence in Kenya

Seeks to assess the legal basis of a transaction and the level of compliance with relevant laws.

  • Legal structure
  • Contracts
  • Review all litigation matters, their status and effect to the transaction.
  • Review the compliance levels with relevant existing laws
  • Financial due diligence

Focuses on verifying financial information provided to assess the performance, credit health and viability of a business venture. It investigates the;

  • Cash flow
  • Liabilities
  • Assets
  • Debt
  • Earnings
  • Management
  • Insurance
  • Reasons/importance of conducting due diligence
  • To confirm the veracity of the information brought up during the investment deal or process.
  • To ascertain potential defects in the transaction deal thus averting risks.
  • Managing a transaction risk and reduces uncertainty risks for investors.
  • Helps a client achieve best value for a transaction
  • Helps a client make a more informed decision pertaining the intended transaction.
  • Allows a buyer to feel more comfortable on their expectations regarding the transaction.

Do you want to conduct a due diligence in Kenya? Please contact us on info@swkadvocates.com or by telephone +254726328555