Any organisation considering a deal needs to check all the assumptions it is making about that deal. Financial due diligence provides peace of mind to both corporate and financial buyers, by analysing and validating all the financial, commercial, operational and strategic assumptions being made. It uses past trading experience to form a view of the future and confirms that there are no 'black holes'.
The components of the service are revenue, commercial and market due diligence, synergy validation, maintainable earnings, future cash flows and all operational issues, as well as deal structuring.
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- You want to strengthen your company's core business by acquiring rival products that are almost identical in function/performance to your own
- You need to build on your company's existing activities by purchasing complementary products
- You want to purchase a company to gain access to its existing products in new markets, or to increase your customer base
- You need to expand your company's current portfolio of products and services through the acquisition of new ones - potentially to provide a hedge against the movements in the markets in which the company operates
- You want to spread your company's market risk by purchasing a company providing similar products or services in another country.
- By enhancing the purchaser's understanding of the target business and therefore increasing the likelihood of the deal achieving its objectives
- By helping you to identify and understand critical success factors and therefore improve your understanding of all the relevant issues so that informed decisions can be made
- By highlighting strengths that can be built upon or weaknesses that can be resolved.
- Commercial due diligence involves a comprehensive review of the company's business plan in the context of market conditions and the industry/competition
- Strategic reviews help companies formulate their corporate strategy and diagnose poor performance, providing a basis on which to prepare plans for improvement and to evaluate new markets and potential acquisition targets. In the case of financial institutions, they also help assess the feasibility of business plans.