CS Professional · Compliance Management, Audit and Due Diligence · Due Diligence

Before acquiring Neelgiri Foods Pvt Ltd, the acquirer's CS recommends one review that covers the target's market position, customers, competition and growth prospects, to test whether the deal rationale holds. Another review covers whether the target's directors and promoters acted with due care and avoided conflicts of interest, as expected under section 166. Which pairing of due diligence types is correct?

The market review is commercial due diligence and the directors' conduct review is legal or compliance due diligence. Market, customer and competition analysis tests the deal rationale, while section 166 duties such as due care and avoiding conflicts are legal compliance matters.

1. AMarket review is commercial due diligence; the directors' conduct review is legal or compliance due diligenceCorrect
2. BMarket review is financial due diligence; the directors' conduct review is tax due diligence
3. CMarket review is legal due diligence; the directors' conduct review is commercial due diligence
4. DBoth reviews are operational due diligence