Due Diligence Service Due Diligence Service | Page 6

Operational Due Diligence aims to understand the operational aspects of a company. An in-depth
analysis of its day-to-day functioning, business processes, and procedures and internal controls is made
to understand its operational efficiencies.
It helps in evaluating whether the internal structure of the company is flexible enough to fit into the
buyer’s business. It highlights process improvement opportunities and performance gaps.
Significance and advantages
Due Diligence is a vital element of every business deal, whether it is between two different businesses or
between a business and a client.
It helps in ascertaining the true value of the target company. It saves the company from making a wrong
investment and facing losses. When it is conducted, it will look at the operational and financial details of
the company providing the idea to the buyer regarding the growth and financial stability of the
company.
There are several compliance-related requirements associated with it. It is also essential to remain
compliant with any anti-bribery laws, anti-money laundering regulations, and counter-terrorist funding.
For that reason, companies even conduct KYC check, making sure that the customer is reliable and has
provided genuine information. This also assures that an entity doesn’t get exploited by getting used for
criminal activities.
It helps in ascertaining the viability of a transaction, knowing the skills and capabilities of the employees
of the target company, assessing the technological framework of the company, and creating synergy
between the companies for achieving the organizational goal.
Due Diligence is itself a risk management tool for companies entering into a business transaction. It
helps to make an informed decision and avoid surprises at a later stage.