Before a company agrees to enlist your services, you’ll first need to complete what’s commonly referred to as a due diligence questionnaire.
One simple form can impact your entire company’s future. It’s up to you and your team to fill it out as best as possible.
But what exactly is it, and what does it mean for your construction company? Here’s everything you’ll need to know to prepare you for the process.
What’s A Due Diligence Questionnaire?
Imagine for a moment that you’re looking to buy a new house. You decide to contact a local real estate agent to help make the process easier.
Upon contacting the real estate agent, you set up a meeting to discuss some houses you’re interested in. But once you get to the meeting, the agent tells you that you must agree to buy a home based on a single photo of each house.
Suffice to say you’d probably back away and call the whole deal off. Without more information, you wouldn’t be able to make an educated purchasing decision.
Indeed, you’d need to do your due diligence and conduct further, more in-depth research before spending so much money.
In essence, that’s the intent behind a DDQ. It’s a questionnaire devised to help potential investors or would-be partners determine whether they’d like to pursue a working relationship with a company.
Why Is Such A Questionnaire Necessary?
As previously mentioned, a DDQ gives potential investors more information about a company and their day to day operations.
Think back to what we discussed a moment ago. You wouldn’t want to buy a house without inspecting it first. Why would investing in a business be any different?
Generally, you’ll come across two different forms of questionnaires depending on the situation.
The first, an acquisition due diligence questionnaire, is used when a company is looking for an outright buyer.
The second is a corporate due diligence questionnaire. This may be used in the initial stages of a purchase, but is often used for investing purposes.
In the construction world, you’ll likely encounter a corporate questionnaire more than its counterpart.
What Types Of Questions Are Commonly Asked?
Both types of questionnaires have the same intent, but their lines of questioning are rather different.
An acquisition questionnaire tends to focus on why a company is selling as well as its legal history. Questions about past financial investments and decisions are often asked, as well as inquiries about past pay freezes and lawsuits are also commonly included.
A corporate questionnaire often has similar questions, but requires more specific documentation. More financial information may be requested, for instance.
A more employee-centric focus is often taken. For example, questions about compliance and regulations are often a focus.
Final Thoughts On The Basics Of DDQ Compliance
So, to recap, what is a due diligence questionnaire?
Well, at its core, it’s an in-depth questionnaire that tells a company whether or not to work for your firm. They serve an important purpose and should always be filled out with as much detail as possible.
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