Due diligence
Due diligence is the systematic investigation of a company ahead of a decision carrying significant risk, an acquisition, an investment, a credit engagement, or a strategic partnership.
A full due diligence typically covers legal, financial, tax, and operational matters with access to the company's internal material. But a large part of the work can today be done on public data before even contacting the counterparty.
What can public sources uncover?
- Financial statements and key figures years back, trends, solvency, and dividend policy
- Ownership structure and group relations, including holding companies and indirect ownership
- Management history across companies, including bankruptcies and forced dissolutions
- Statstidende: insolvency proceedings, probate estates, and creditor notices
- Properties, registered locations, and production units
The public part of the investigation is cheap and fast, and often reveals facts that change the negotiating position or stop the deal before money is spent on advisers.
Related terms
Credit assessment (kreditvurdering)
A credit assessment (kreditvurdering) is a systematic evaluation of whether a company can and will pay its obligations. It typically builds on financials and key figures, the company's age and industry, and the history of management and owners.
Beneficial owners (reelle ejere)
Beneficial owners (reelle ejere) are the natural persons who ultimately own or control a company, as a starting point, persons with more than 25% of the shares or voting rights, directly or indirectly through other companies.
Bankruptcy (konkurs)
Konkurs (bankruptcy) is the judicial winding-up of an insolvent company: the bankruptcy court issues a decree, a trustee takes over the estate, assets are sold, and proceeds are distributed to creditors by statutory priority.
Annual report (årsrapport)
An annual report (årsrapport) is a company's complete official financial reporting for a fiscal year, typically income statement, balance sheet, notes, and management review, filed with the Danish Business Authority and made public.