Due Diligence Service Nigeria

We are Nigeria’s top Due Diligence Service Providers offering targeted investigations in acquisition targets, reviewing their financial situation, operations, marketing and risks, compliance, litigation positions, ethics, bribery, corruption, compound background, customers, market share, age of debts, tax position and compliance, regulatory exposure etc.


Topnotch professionals with varied skills across Law, Finance, Banking, Taxation, Agriculture, Technology, Engineering, Medical Sciences make our team where their specialist skills are required.



Our Client enjoy our deep skills in data analytics, research skills to protect them from losses, legal matters, penalties and fines.


Introduction & Background

Due diligence evolved in the year 1930 in the legal word been associated with stock brokers being their obligation to take proper care and investigate into the investment at hand before the investors forge ahead with their investment. It is an activity which is basically tagged to the required or desired level of sound investigation the stock broker must conduct on the investment (securities) they are selling to investors. The term due diligence later portrayed itself as the investigation process which should be adopted by an investor through the broker further than it original province of public offerings to personal merger and acquisition.

In the business world today, you can encounter the term “due diligence” to signify investigations performed in a wide variety of business situations and at different stages of the investment process. However, in this article we are focusing on the most common use of the term in the financial world:

Concept definition

Due diligence can be said to be the thorough examination or audit of a prospective investment or product to verify all particulars, such as checking all financial documents and anything regarding the business or product. It talks about every observation and check a person should conduct before acquiring or going into business transaction with another party. Due diligence is the comprehensive investigation a latent investor carries out on a target business subsequent to effectively completing preliminary negotiations with the business’s owner.

Due diligence can also be conducted by a seller of a product or business to ascertain if the buyer has the ability and what it takes to completely and out rightly purchase or rather complete the transaction and not forgetting other basics that would have an effect on the acquired article or the supplier after the deal has been concluded.

Looking at the investment world, due diligence is done by organizations on the lookout to make acquisitions, by equity research analysts, by fund managers, broker-dealers, and of course by investors. In support of individual entrepreneur investing, conducting due diligence on a security is not enforced but recommended to be on the safer side. Stock Brokers are however lawfully compelled to carry out due diligence on a security before selling it. This will not make them liable later for not disclosing some pertinent information to the investors.

Due diligence meeting is used to start the standard part of an initial public offering as a careful examination process by a trustee which is the underwriter to ensure that all the documents needed for the security are given or issued or are made obtainable and accessible to the potential investors. It is even in the expected before final prospectus is issued that the underwriter accompanied with some other people like accountant or a lawyer, issuer to hold a meeting to affirm the fact that the underwriter and issuer have conducted thorough due diligence on the security obeying both the federal and state securities law.

When negotiating a transaction, it is the aim of the seller to persuade the buyer that any money they put into his business will make available good proceeds on their investment. They need to be sure of the facts and convinced that they are making an intelligent decision. Due diligence is that assessment process which is conducted.

Some financial managers sees due diligence as an art and a science because it involves knowing where to look, what to ask, what tools to use, who to ask, how to test premises/answers, who should ask and how to verify the data collected to produce the information need for the investor, buyer or even the seller.



Types of Due Diligence

  1. Financial due diligence talks about a careful study and review of the intended company’s financial statements, tax returns, accounting policies, and financial trends. It serves as the starting point for your due diligence process.
  2. Legal due diligence examines the critical aspect of the prospective company making sure it legal framework is intact and the company is not liable to any crime or offence which may later give way to punishment or sanction. It entails review of corporate documents; contracts and agreements; ongoing, pending and potential litigation; environmental factors; and legal and regulatory compliance.
  3. Business due diligence has to do with the analysis and review of strategic and business plans, customers and products, markets and competition. It gives such information like identifying if the industry will change or if the major customers transacting with the company are still willing to transact with the company after acquisition.
  4. Operations due diligence includes the examination and evaluation of the company’s technology, fixed assets and facilities, as well as real estate and insurance coverage. It also looks at whether there is any important operational risk that affects the business pricing and execution.
  1. Human Resources due diligence takes a deep look into the organization’s formation, employee remuneration, management and personnel, and labor matters and every other human resources that will aid the company aim. It checks if they are up to the task and can still drive the organization to profitability.

The Due Diligence Process

Here are the steps to follow when conducting due diligence review by an investor be it for equity, debt instruments, real estate or other investments.

The following are the steps involved in the process of preparing a due diligence:

Comprehend Compliance Concerns

Getting the great understanding about the compliance is important as the number of regulations enforced on the business is frequently on the increase because it is an ever-growing business environment.

Identify Corporate Objectives for Due Diligence

The corporate objective of conducting due diligence of an investment is to align with strategies, policies and regulations including their financial risk which may be faced by the business entity.

Gather round Key Information

It is of utmost priority to gather important and useful information on issues including political connections, members of the board, document of incorporation and that of the shareholders of the business.

Examine potential Third Parties alongside Watch lists

Due diligence entails examining the prospective third parties used as trustee to determine if they could expose the business to any form of significant risk. The entity should be checked against points of law enforcement lists, global sanctions list, published lists of debarred companies, etc.

Perform a Risk Assessment

Performing risk assessment is very important as the investor won’t want to be exposed to any form of risk after buying the business. Points to look at involve high level of government participation, country risk and financial risks arising due to problems in internal factors.

Authenticate the Information gathered

The need to authenticate or validate the information gathered is very important after the risk assessment have been performed as this will build confidence in us to place reliance on the information gotten.

Document the Due-Diligence Process

Documentation of the due diligence procedure is also important as it will enable us calculate the return on investment when needed. In the document, we should have all relevant information that will make our due diligence more effective.

Set up an On-Going Monitoring Plan

Setting up non-stop monitoring plan is the next step to think of as it help us to examine properly the entire process to avoid any form of unwanted problems which may want to arise now or later.

Appraisal of Due-Diligence Process frequently

Lastly, we set up a system to help appraise the whole due diligence process as often as possible to keep coping with the change in the business environment. This should be done often so as to get incorporated in the due diligence process.


Understanding the differences between an audit and financial due diligence

In the context of mergers and acquisitions, potential investors always have some level of assurance when the business or investment they about acquiring is well audited.  On the other hand, relying wholly on audited financial statements when making an investment decision is to be made is not too good as other aspects aside financial aspect have to be looked into before the acquisition is made. An audit’s purpose is to give assurance that management has offered a true and fair view of a company’s financial performance and position.

The due diligence process typically covers a wide range of areas, including legal, information technology, operational, marketing and financial matters.  Financial due diligence (often referred to as “accounting” due diligence) focuses on providing potential investors with an understanding of a company’s

  • sustainable economic earnings,
  • historical sales and operating expense trends,
  • historical working capital needs,
  • key assumptions used in management’s forecast, and
  • key personnel and accounting information systems.

Although audits may provide a starting point for a potential investor’s evaluation of a company, they generally do not comment on the focus areas noted above.





Brandon Lamb and Lathrop Smith of Maxwell Locke & Ritter drew out this table showing

Summary of key differences between audits and financial due diligence engagements:


It is important for investors to conduct due diligence on a target Nigerian company before investing in it whether by means of restructuring, mergers, acquisitions or takeovers. This is because the real state of the company may not be stated in the books of the target company or known to the investor until it takes full control of the company. The main reasons why due diligence is very important is to;

  1. minimise the potential loss to the Investors’ creditors and ensure fiduciary duties are performed diligently;
  2. monitor the target company’s financial position and ascertain its debts;
  3. take specialist advice and, if there is a prospect of insolvency, refraining from incurring new liabilities;
  4. if there is an indication of the company’s insolvency, consider discontinuing business with the company; and
  5. if there is a reasonable chance of saving the business, take appropriate action like negotiating new financing and working with creditors to save the company.

What due diligence is necessary for Investors of the target company?

Investors must undertake financial and legal due diligence before any scheme arrangement or investment in a target company. Financial due diligence is managed by the Investors’ accountants and management team, and is expected to reveal the following;

  1. the accounting and financial control system of the company;
  2. the value of assets and liabilities to be acquired;
  3. the product development and competitors; and
  4. the company’s ability to raise short and long-term capital and the cost of such capital in relation to general industrial indications.

Legal due diligence is conducted by the Investors’ Solicitor and identifies the potential legal issues and problems that may impede transactions, such as IP and technological issues and those relating to transactional documents and agreements, business profiles or employees.

What information is available to Investors of the

Financial due diligence (Buy-side)

Financial due diligence involves an investigative analysis of a business, assessing the key issues facing the business and the drivers behind maintainable profits and cash flows, identifying the key financial risks and potential deal breakers of the transaction.


Our approach aims to identify the value created by the transaction, including analysis of:

  • Actual earnings (identification of one-off events and sustainable earnings)
  • Financial projections
  • Cash flow generators
  • Capital expenditure
  • Working capital
  • Management information system and control environment
  • Employment issues
  • Commitments and contingent liabilities that might endanger financial performance or otherwise adversely affect the target’s financial position after the transaction.

Our work may relate to an acquisition of the shares in a company or its assets (or a group of assets) as well as the organised part of the enterprise. We conduct our projects in close cooperation with our clients and the investor’s other advisers, which enables us to achieve complete understanding of investors’ expectations and provide high-quality deliverables.


Tax due diligence (Buy-side)

Our experience indicates that identified tax risks can have a significant impact on the market value of the target company and might constitute a crucial argument in price negotiation process. The aim of the tax due diligence is the analysis of the target’s tax treatment in respect of its consistency with Polish tax regulations, legislation of the administrative courts and the instructions issued by the Polish Ministry of Finance. Our services in respect of tax due diligence include, in particular, analysis of the target’s tax settlements and social security contributions in order to identify tax risks and analysis of decisions concerning historical tax controls undertaken by relevant authorities

Why Perform Due Diligence

Quantify the real risk of a financial transaction, particular if the transaction takes place in a jurisdiction unfamiliar to you

Assist in accurate decision-making

Identify red flag issues

Provide leverage for business valuation and negotiation

Verify that investment or acquisition criteria have been met

Ensure the other party or company is trustworthy

Meet legal compliance and/or get regulatory approvals

How we can help you

We have a history of supporting organization with detailed and professionally executed due diligence services that meet their needs.

Our procedures are rigorous, allow us to provide opinion that are reliable. Our Team Lead are experienced Professionals in that sector and we provide customized solution covering critical risk that needs management.

Each due diligence engagement is led directly by a partner to ensure that the most experienced sector individuals are involved in the process.

To learn more how we can help you our services discussed here, please reach us now on 08023200801, email enquiry@mocaccountants.com or send us a detailed request by completing our enquiry form



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