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LFA / Services / LFA Due Diligence 3PL
LFA Due Diligence 3PL

LFA Due Diligence 3PL

  LFA Due Diligence 3PL
LFA Due Diligence 3PL – system of logistics providers appraisal (in terms of investment) adapted to Russian market. The appraisal system is based on traditional procedures of Due Diligence adjusted to Russian and CIS practices, methodology of Logistics Field Audit™, LFA Certified Provider standards developed specially for Russian logistics providers in accordance with international standards.

LFA Due Diligence 3PL reveals through careful analysis weakness in performance and indicates recommendations for business operations.

 Due Diligence practice in Russia
At its best, Due Diligence is about taking reasonable precaution that the stated facts of corporation are correct. For good reason, past business practice in Russia has tended towards obscuring the truth of an enterprise and few significant businesses comply with international accounting standards.
When Due Diligence analysis is being conducted, large teams of professional staff from range of disciplines are deployed. The resulting report is of a depth and range so as to give the investor some assurance of the corporation’s voracity and business prospect.
During Due Diligence Russian experience some standard procedures have been worked out. These are:

  • Sampling audit of accounting system. Its aim is to correlate bookkeeping and tax accounting to legislation, detect system and methodological mistakes.
  • Professional valuation of company shadow turnover. Such an expertise is conducted to refine the profit figures in books with the aim to get more precise information about company’s financial performance.
  • Financial and economic analysis of company’s performance. This analysis is conducted to value tangible and intangible assets, also to estimate the level of financial and economic stability.
  • Legal expertise. This expertise is conducted to define risk level concerned with business legality, contracts in force and legal procedures.
  • Valuation of top and middle managerial staff.  This examination is conducted to get information about managerial potential. 
  • Valuation of technical level of production or project. This examination is needed for determining the technology readiness for project realization, and in case of production – quality of equipment.
  • Marketing research of products being produced and/or of new or modified goods. It is conducted with the aim to define the demand stability for produced goods and the projected demand for new goods.

 LFA Due Diligence 3PL
The LFA Due Diligence follows current best practice and international standards adapted to meet conditions prevailing in the logistic sectors of Russia and other CIS States.

LFA Due Diligence 3PL identifies a corporation’s performance weakness and the steps needed to make improvements.

In the case of equity investment, LFA fields highly qualified logistic staff whose capabilities extend beyond the limit of their prime knowledge.

During the LFA Due Diligence 3PL process the following blocks are analyzed:


1.      Management of the company. The structure of the company, professional level of management, financial management and reporting system, quantity and financial figures are analyzed (in the same way as traditional procedures of Due Diligence: sampling audit of accounting system, Professional valuation of company shadow turnover, financial and economic analysis, legal expertise, top and middle management appraisal).
2.      Quality of equipment. That is a valuation of logistics provider’s assets, such as vehicles, repair capacity, maintenance capacity, warehouses and warehousing equipment, and other assets used while logistics services providing. Information about assets legal and dislocation status is also checked.
3.      The level of logistics services. The range and level of logistics services are defined in accordance with Russian classifier of services range and LFA classifier. All the needed licenses and certificates of providers are examined.
4.      Information Technology. The IT support of logistics function and accounting is examined: software in use in terms of its reliability, interface; hardware, telecommunication, service backup etc.
5.      Documents turnover. Typical documentation flow is evaluated, e.g. standard contracts with clients and contractors, its adjustment to international standards, Russian legislation and standard customers’ requirements.
6.      Security and insurance. Logistics-auditors investigate information about measures taken and ways of providing freight safety, freight and logistics assets insurance system, form of responsibility while providing logistics services.
7.      Market positioning. Executor evaluates the most important contracts, price-quality correlation, level of communication with customers, marketing strategy and activity in accordance with market figures and potential clients’ requirements.

The application of the Logistics Field Audit™ methodology while implementing LFA Due Diligence 3PL helps to get complete, independent estimation of logistics provider’s business, uncover hidden values and define effective strategy of development.

 

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