(a) Benefits of due diligence

Up to 2 marks for each benefit explained (only three benefits required):

– Identify and value assets and liabilities to be acquired
– Identify and allow planning for operational issues
– Provision by external experts – technically competent and time efficient 
– Assessment of potential impact of court case
– Evaluation of the liquidity position of Locke Co
– Enhanced credibility provided by an independent review

Maximum marks 6

(b) Information required

Generally ½ mark for identification and up to 1 further mark for explanation (maximum 3 marks 
for identification):

– Service contracts of directors
– Organisational structure
– Lease/arrangement regarding head office
– Details of land purchased
– Planning permission for new head office
– Prior year accounts and management accounts
– Forecasts and budgets
– Loan agreement
– Overdraft facility details
– Legal correspondence
– Customer satisfaction surveys
– Details of warranty agreements
– Outsourcing agreement

Maximum marks 12