Manage Your Business Risks with Due Diligence in Uruguay

Discover the benefits of due diligence in Uruguay to make the best decisions when doing business in the country.

Uruguay ranks amongst the top nations of Latin America in the Human Development, Human Opportunity and the Economic Freedom Index. The Stability of Uruguayan institutions and low levels of corruption stimulate a healthy and vibrant business environment.

Currently, Uruguay is one of the most attractive destinations for foreign executives looking to do business in the region. Nevertheless, language barriers, local legislation and unknown tax system might represent a challenge for business owners expanding in the country. Therefore, managing your business risks with due diligence in Uruguay is essential to protect your company and ensure success.

What is due diligence?

Due Diligence involves an investigation process in which a review of a company’s financial, legal corporate, and employment status is carried out to prevent potential business risks. Due diligence also identifies hidden liabilities or other negligences. In Uruguay, by conducting comprehensive due diligence reports, you can rest assured that your investment will be safe and that you are making the right decisions in regards to your business.

Standards & Poor’s agency confirmed Uruguay as a country with a BBB credit rating -one step above the investment-grade- whilst maintaining and stable outlook. According to the agency, the country’s rating is based on “its track record of implementing moderate and predictable economic growth for more than 15 years“. However, as foreign individuals and companies decide to enter the promising Uruguayan market, it is imperative to consider the importance of mitigating business risks with due diligence in Uruguay.

Advantages of conducting a process of due diligence in Uruguay

The main goal of conducting a process of due diligence in Uruguay is to reduce risks by analyzing the operations of a company and validating compliance with local legislation and institutional authorities. The two main advantages of due diligence are:

1. Enables the investor to know the in-depth ins and outs of the business that he or she intends to acquire

Through due diligence, business executives will obtain the necessary information about the activity of a company, its organization, its previous transactions and its labour policy. This process also examines other aspects of special interests when doing business.

2. Reduces transaction risk during the buying and selling process

Through the letter of intent, the investor -in addition to expressing the interest in the purchase or investment in the business- expresses the well-known “Deal-Breakers”. Therefore, performing due diligence is very useful to detect possible negligence or contingencies such as financial, commercial and tax irregularities.

Due diligence can adapt to your own needs

Due diligence in Uruguay includes a comprehensive collection of a significant variety of company-specific information as well as official documents. Once the information has been requested and obtained, fieldwork begins. The investor with the assistance of his legal and accounting advisors will proceed to the collection of data and its corresponding analysis to draw conclusions.

Normally, the investor/buyer is usually the person applying to initiate a due diligence process. However, less often it is sometimes the seller himself who carries out these procedures before putting his company up for sale.

As mentioned above, due diligence in Uruguay cannot be standardized but must be adapted to the needs, objectives, and risks identified by the investment party in each concrete. However, the following aspects are usually the ones discussed in a due diligence process:

• Commercial and corporate analysis.
• Financial analysis.
• Labour and social security analysis.
• Tax analysis.
• Analysis of ongoing court proceedings.
• Other aspects deemed necessary (E.g Environment).
• Analysis and description of the business.

Manage your business risks with due diligence in Uruguay

Making the decisions to hire a trusted due diligence provider will be advantageous for individuals or companies interested in starting operations in Uruguay. However, establishing investments abroad or acquiring a company in the country can be challenging without the knowledge of the local business environment.

At Biz Latin Hub, our team of multilingual professionals have the expertise and experience in undertaking extensive due diligence reviews to ensure your company is protected while doing business in Uruguay. We are able to facilitate your local operations through our full suite of professional company formation and back-office services. Get in touch with us today for personalized advice.

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