Investing in a business by acquiring or becoming one of several shareholders is an important financial decision. While an investment offers potential returns, it also inherently produces risks. Potential outcomes should be carefully considered before making a final decision about your acquisition target.
William Buck provides transaction advisory services through a pre-acquisition due diligence review to secure a successful investment. The transaction services begin with understanding the rationale for the acquisition and/or investment, working with you to carefully design the business due diligence process. This process includes:
- Addressing any areas of particular concern
- Critically analysing financial and non-financial data
- Presenting the findings in a detailed written report focusing on the important issues.
The William Buck due diligence methodology issues a comprehensive and easy-to-read report, with any identified risks clearly highlighted and solutions suggested.
Our transaction advisory team supplies the parties wishing to sell their business with Vendor Due Diligence which provides potential bidders with a detailed financial review of the business, prior to the business embarking on the sale process. This allows for a more streamlined sales process and allows the vendor to understand any areas of concern (and potentially mitigate these) before engaging with buyers. See the process of our transaction management services below:
Our financial due diligence process explained:
Understanding the target business
- Review of the historical business performance and current business and strategic plans
- Meetings with management and site inspections
- Understand key business drivers and the industry landscape
- Understand the intentions of the business and vendor and the terms of the proposed transaction
Quality of earnings assessment
- Verification of profit and loss items and accounting policies
- Understanding material profit and loss movements
- Financial analysis of historical normalised earnings
- Assessment of forward-looking earnings
- Analysis of the quality of the revenue base (customer/product concentration, recurring vs one-off revenue etc.)
Balance sheet and working capital analysis
- Verification of balance sheet items and accounting policies
- Assessment of net debt
- Assessment of current and future working capital requirements
Risk assessment and mitigation
- Highlight key financial and commercial risks associated with the potential purchasers
- Propose strategies to mitigate identified risks
- Assist with negotiation of sale and purchase agreement if bid proceeds
What are common issues to look out for in Due Diligence?
- Trends in financial performance pre and post-Covid
- Working capital levels over the past two years and what is required to operate the business over the next 12 months
- What level of profit is appropriate to judge the performance of a business, EBIT, EBITDA, NPBT.
- Normalised earnings, adjusted for any one-off and non-recurring items, and
- Debt levels.
