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CS Professional · Corporate Restructuring, Valuation and Insolvency · Planning and Strategy

Ganga Logistics Ltd is considering acquiring Yamuna Carriers Ltd. In which situation does the commercial due diligence, as distinct from legal or financial due diligence, add the most value?

Commercial due diligence adds most value when it tests whether the target's market growth, customer concentration and competitive position support the assumed synergies. Registers, title deeds and tax orders fall under legal, secretarial or tax reviews rather than commercial due diligence.

  1. AChecking whether Yamuna's statutory registers are properly maintained
  2. BTesting whether Yamuna's projected market growth, customer concentration and competitive position justify the assumed synergiesCorrect
  3. CVerifying title deeds of Yamuna's warehouses
  4. DReconciling Yamuna's tax assessment orders with its returns

Explanation

Commercial due diligence examines the market, customers, competition and business plan assumptions. Registers, title deeds and tax orders belong to legal, secretarial or tax due diligence. Testing synergy assumptions against market reality is the distinct contribution of the commercial review.

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