Due Diligence Handbook

Due Diligence Handbook

Corporate Governance, Risk Management and Business Planning

1st Edition - October 1, 2008

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  • Author: Linda S. Spedding
  • eBook ISBN: 9780080942681

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This book brings together practical information on legislation, primary sources, codes and best practice guidance in one volume. A practical handbook for business directors who wish to minimise financial, legal and reputational risks. It combines all matters concerning corporate governance with due diligence issues and in doing so provides you with the information and tools you need to help you protect your business when under taking due diligence, particularly when making international acquisitions. The book provides clear guidance and case studies to help all involved understand the complexity of issues and to demonstrate the detailed work that is necessary both to ensure that the benefits of an acquisition can be realised and that there are no unexpected problems, for example through damage to corporate reputation that more that offsets the targeted benefits. As high profile business failures tarnish the reputation of international business it is essential that business responds by having the policies and practices in place in day-to-day operations and in particular, as this book demonstrates, when a major business development such as an acquisition is being implemented.Following the initial era of codes in the UK and regulation in the USA and major debates as regards the best approach to corporate governance in the common law countries, controversy has developed over which approach is really more appropriate for business planning purposes and risk management. Given the trend for many UK companies listed on the US market to de-list in favour of the more British approach to corporate governance and in light of more European corporate scandals this book provides a comparative analysis of the European frameworks for governance. The EU approach and the individual jurisdictions of Germany, Italy, the Netherlands and France, in terms of their practical success or failure (with case studies)is covered. With the debate over an EU Constitution and the political stance of Germany (under the Merkel leadership) during its Presidency to revive the Constitution the book assesses the EU approach generally at a time when the competitiveness of companies and key business sectors must consider the thrusting economies of India and China in particular. The link with competitiveness is an increasingly crucial matter.In connection with due diligence, the book provides an update of the business world in light of the world's economy and links corporate governance, risk management and business planning to reflect such business, political and regulatory trends and changes. In recent years there has been much comment and feedback on the effectiveness of the Sarbanes-Oxley approach to corporate governance and many updates on business ethics and sustainability issues, which this book also covers in the context of due diligence. In addition, since there has been a major shift in business awareness to develop, or be seen to develop, a more enlightened approach to climate change coverage of this area is include in the book in the appropriate context of governance, risk management and business planning, as well as the trends in different parts of the world (USA (and some others v many others!). There are case studies within the book on how business is operating in order to respond to this issue with an international dimension and comparison. The whole debate over being carbon neutral has impacted on the airline industry in particular and has relevance to how industry sectors should balance the interests of the different stakeholders and cope with rather fast attitude changes of the media and public (and the regulators). The importance of energy security has raised key competitiveness issues of major interest and commercial significance. Moreover the angle of fraud in this sector has become more evident. The area of energy security within this book is tied into ethical accounting, fraud, risk etc. and economic crime. These new areas can be set against the background issue of how much of this comes into play with due diligence. How far is this now part of risk management in todays business world.New legislation is covered in terms of developments with the UK Companies Act and Directors? duties with an increasing need to understand reputational concerns and off balance sheet values since the withdrawal of OFR.

Key Features

  • The only book that looks at due diligence how it's used and how to get it right in the context of Corporate Governance, Reputational Risk Management and Business Planning
  • A practical guide with case studies and checklists illustrating key business drivers which enable you to monitor risk management effectively
  • Covers the latest regulatory UK and EU framework for due diligence, and doing business across international boundaries, India, China, USA etc.


Chief Finance Officer; Finance Director; Managing Director; Risk Officer; Compliance Officer; Company lawyers - barristers and solicitors; Financial services lawyers- barristers and solicitors; Competition lawyers - barristers and solicitors; In-house lawyers in plcs; Accountants; Auditors; Company secretaries.

Table of Contents

  • Contents

    Author and Contributors
    Table of International Statutes
    Table of Statutory Instruments
    Table of Cases
    List of Key Abbreviations
    Chapter 1 Introduction and Traditional Due Diligence
    Legal due diligence
    Financial due diligence
    Risk and insurance due diligence
    Beneficiaries of due diligence
    Transactional and operational concerns – integration value post-merger
    Other business issues
    Drivers for ongoing due diligence
    The interaction with risk management and corporate governance
    Transactional and operational assessments
    Appendix 1 – Overview of main issues for a due diligence exercise
    Appendix 2 – Initial steps in transactional due diligence in the UK
    Appendix 3 – Specimen auction or tender process letter
    Chapter 2 Due Diligence In Corporate Finance
    Due diligence process
    Anti-money laundering due diligence
    Financial due diligence
    Commercial due diligence
    Prior borrowing arrangements
    Commercial contracts and other agreements or arrangements
    Licences and intellectual property rights
    Real estate and business assets
    Employees, consultants and directors
    Pension arrangements
    Warranties and indemnities
    Chapter 3 Money Laundering
    Money laundering offences
    Measures to prevent money laundering
    Chapter 4 Drivers for Due Diligence and Corporate Governance
    Business benefits through risk/reward balance
    Regulatory background and drivers
    The choice of vehicle, structure and liability in business
    The Limited Liability Partnership
    Governance and the balance of interests
    Corporate social responsibility
    Small business risks, due diligence and risk management
    Appendix – Example of initial due diligence list for the purchase
    of a regulated financial services business
    Chapter 5 Key Due Diligence and Corporate Governance Organisational Areas
    Alternatives to litigation
    The role of tribunals
    Due diligence and late payment issues for business
    Business interruption and recovery
    Business continuity and operational risk management
    Crisis management – a view from the US
    Appendix – Glossary
    Chapter 6 Commercial Due Diligence Case Studies
    Case study 1 – The biotechnology industry
    Case study 2 – The shipping industry
    Chapter 7 Reputation Risk Management
    Why does reputation matter?
    Value of brands and their importance to reputation
    Reputation and corporate culture
    Examples of major losses of reputation
    Integrated reputation risk management
    Reputation risk management, the Turnbull Report and the new Combined Code
    Chapter 8 Cultural Due Diligence
    A managed risk culture
    Change management
    Culture clash in mergers and acquisitions: risk mitigation
    Appendix 1 – Outsourcing and offshoring – the Indian case study
    Appendix 2 – Bridging the digital divide in India through corporate and social
    responsibility and the reuse of redundant IT equipment
    Chapter 9 Information Technology and E-Commerce: Issues of Due Diligence, Risk
    Management and Corporate Governance
    Data handling risks
    Contract risk in e-commerce
    Business interruption
    Technology due diligence: managing legal risk exposure
    Management of intellectual property issues
    Legal risk issues in Internet commerce
    Protecting digital assets
    Managing liability issues
    Designing a risk management framework
    Legal audit
    Appendix – Checklist for implementing a corporate digital asset
    management policy
    Chapter 10 Corporate Governance Issues
    Corporate governance definitions and drivers
    The Cadbury Report
    The Greenbury Report
    The Hampel Review and the Combined Code
    London Stock Exchange Listing Rules
    The Turnbull Report
    Recent developments
    Practical corporate governance
    The role of risk management
    Systems and methodologies for risk management
    The Operating and Financial Review
    Chapter 11 The Sarbanes-Oxley Act of 2002
    Basic goals of act
    Specific aspects of the act
    Environmental issues under SOX
    Chapter 12 International Dimensions and Corporate Governance:
    the Indian Perspective
    History of governance in India
    Corporate governance in India
    The legal and regulatory framework regarding corporate governance in India
    Corporate governance: Indian practice
    Capital market regulations
    Committees on corporate governance
    Other corporate laws of India
    Chapter 13 International Dimensions: Corporate Governance in Hong Kong
    Special Administrative Region and the People’s Republic of China
    Background to corporate governance in Hong KongDirectors’ Duties
    Transparency and disclosure
    Executive pay
    Shareholders’ protection
    Corporate governance in the People’s Republic of China (PRC)
    Chapter 14 International Dimensions: Corporate Governance in Australia
    What is good corporate governance?
    External advice to assist in good governance
    HIH – A case study of a catastrophic failure in corporate governance
    Chapter 15 Corporate Governance in Japan
    The core problems of corporate governance in Japan
    General meetings of the shareholders
    The board of directors
    Important asset committees and corporations with committees
    Chapter 16 Environmental Due Diligence and Risk Management
    Transactional tools
    Environmental auditing and international standards
    Environmental accounting and managerial decisions: governance issues
    Environmental insurance: reducing risk and liability
    Ethics in international trade, investment and project finance: shared responsibility
    Environmental liability
    The environmental balance sheet
    Trends in transboundary trade and environmental standards
    Appendix – Environment, Health and Safety Simple US Company Questionnaire
    Chapter 17 Charity Considerations: Issues of Transparency and Governance
    Accountability and corporate giving
    Fundraising and related developments
    The Charities Bill
    Reporting requirements
    Protecting whistleblowers
    Governance issues
    Trustees duties: governance for non profits in the USA
    The Tyson Report
    Chapter 18 Governance in the Family, the Family Business and Family Trusts
    Governance theories and practice
    Governance, the family and long-term wealth preservation
    The family in business
    Family trusts

Product details

  • No. of pages: 752
  • Language: English
  • Copyright: © CIMA Publishing 2008
  • Published: October 1, 2008
  • Imprint: CIMA Publishing
  • eBook ISBN: 9780080942681

About the Author

Linda S. Spedding

Dr Linda Spedding holds an LL.B. (Hons), LL.M., Ph.D. She is a Solicitor (England & Wales), and Advocate (India) and an Attorney (USA). Having worked with international law firms, she set up her own practice and remains a consultant to law firms and institutions. Dr. Spedding has authored many articles for professional journals and several books for a professional and business audience, including “Due Diligence and Corporate Governance”. She has been an international advisor to many commercial and professional bodies both in the private and public sector, including SERM and EFR. She serves on several committees, including the SCI Business Strategy Committee. Dr Spedding is International Sustainability Advisor to the CII and to TERI in India and is as an International Consultant Advisor with the Metropolitan Police Service at New Scotland Yard.

Affiliations and Expertise

Independent Consultant in Business Risk Management and Due Diligence, and Qualified Lawyer in the UK, EU, India and the USA. Independent Consultant in Business Risk Management and Due Diligence, and Qualified Lawyer in the UK, EU, India and the USA

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