What is commercial due diligence?
Commercial Due Diligence is a regular practice of investigating several elements of the entity to ensure that it is trading and in accordance with local regulations. The method is most often used in real estate. Due diligence can be carried out by a creditor, manager, seller or buyer. A typical overview would include the evaluation of structural, environmental and systematic areas. Problems, such as compliance with land -use planning laws and the Building Code, are also usually examined. In many cases, this is simply a regular part of the process of ownership, buying or selling real estate. There are other situations where proper care can be done because a potential problem has been revealed or the buyer believes that the property owner has an overvalued value and further investigation is required.
In order to perform commercial DUE diligence from a marketing point of view, investigator, investigator will check both the previous entity and the project, as expected to work. Typical assessment would be based on Cíchy of this entity balanced on market conditions. A thorough inspection takes into account the competition, our weaknesses in the entity and the overall economic client. Research can also focus on past problems that could weaken the marketability of the subject.
The Real Estate Review may also be included in the commercial DUE diligence process. This may include exploring physical elements such as the structure of the building; electrical systems; roof; and heating, ventilation and air conditioning. The overall process of real estate research is commonly called the evaluation of the status of property or PCA.
Commercial Due Diligence may also include the environmental review of the site. These are commonly referred to as the assessment of phase I and Phase II. Phase I evaluation involves examining potential contamination or sources of contamination in any air, soil and water on or surrounding property and structure itself. Phase II assesslies to contamination. It consists of laboratory tests of elements from the surrounding and internal environment to see if there is a problem.
The commercial review of DUE diligence may also include a message that outlines both improvements, in the short term, and in projects that will have to be performed in the future. This type of message may include detailed costs, scope of work and time table. Some creditors require the publication of this information.