Due Diligence

Due diligence is the investigative process used to uncover the critical aspects of the transaction, whether it is an asset acquisition, new business venture, asset sale, or joint venture.

A properly designed due diligence program helps you manage and mitigate risks, reducing post-completion surprises that negatively impact upon the expected transaction value (and may have altered your decision to invest in the first place).

A due diligence program may, depending upon the nature of the investment, focus on:

  • Legal matters
  • Accounting and taxation
  • IT
  • Commercial – customers, competitors, state of the market
  • Management expertise of the target
  • Environmental issues

Findings from the due diligence process enables you to:

  • Value the opportunity (including quantifying the risks), and determine purchase price
  • Employ appropriate risk mitigation tools in structuring the transaction and negotiating the transaction documentation
  • Develop an integration plan
How we can help you

We are highly experienced at devising cost-effective and comprehensive due diligence programs across a broad range of transactions. We have strong relationships with other specialists (eg lawyers, accountants, tax advisors) and will ensure the right expertise is brought to the team.

We coordinate the work of the internal and external specialists, assess their findings and then work with you to quantify the identified risks and benefits.

These findings can be critical in formulating a valuation and assessing the merits of the deal, and at times may lead to you deciding not to proceed with the transaction.

Vendor Due Diligence

Being the seller in the divestiture process can be difficult. You seek maximum value for the business being sold, but do not want a protracted sales program, particularly where you are negotiating with a number of potential buyers.

Similarly, potential acquirers of your business may be deterred by the cost of conducting their own full due diligence program and decide not to participate in the sale process, rather than risk incurring costs.

Therefore, where there are a number of potential parties involved, it is often more efficient for the seller to commission their own due diligence reports to be made available to selected interested parties.

Vendor due diligence benefits the seller by:

  • identifying potential issues that an interested party is likely to raise, which could impact price or a parties interest in the business altogether. "Forewarned is forearmed" and therefore early identification of possible deal-breakers allows the seller to mitigate the issues before interested parties become involved
  • simplifying and shortening the sale process
  • Minimising business disruption caused by repetitious due diligence programs and Q&A with management

duediligence