is the analysis of the target company's operations and financial statements that is usually carried out prior to transactions that change significantly the company’s shareholder or capital structure. Such transactions include acquisitions, disposals or mergers, creating joint ventures and financing investments.
- identify the factors influencing the transaction price;
- hedge transaction risks (e.g. by a proviso in the purchase agreement concerning potential liabilities);
- collect additional information on the existence of synergies;
- assess the compatibility of managerial systems and procedures (e.g. the compatibility of computer systems).
Our financial advisers help
- focus on key issues that may have a substantial impact on the transaction value;
- assess the proportion of each single customer, product prices and profits by customer, obligations arising from contracts and customer solvency;
- identify other issues relevant to the transaction.
Due diligence may focus on various matters, such as financial statements, tax and legal issues, and business activities. Combined due diligence provides an in-depth analysis and evaluation of each aspect of the company’s operations. The analysis should identify the company's ability to maintain its profits and positive cash flows after the deal.
Successful due diligence enables you as the acquirer to
- form an opinion of the value of the company and address other important price and valuation related issues;
- check the information provided by the seller;
- influence the negotiation process;
- design the transaction and financing structure;
- specify post-deal integration plans;
- select an appropriate management strategy for merged companies;
- understand threats jeopardising the transaction.