Acquisition & Vendor Due Diligence

Informed investment decisions

In an ever more complex business environment, we can support you in the analysis and assessment of available information in order for you to make an informed decision and create the best value from a transaction.

Our due diligence expertise is complemented by industry and functional experts. In case of cross-border transactions, we leverage our international network of M&A professionals across a wide range of sectors with extensive due diligence experience.

We work alongside you at every stage of the acquisition process to provide support in analysing the key issues that affect your bid and can support you all the way through the process, including specialist sale and purchase agreement advice and post-merger integration services.

Our Diligence offering is designed to keep you in control and aware of issues as they arise, as well as providing expertise and informed advice in order to support you in developing your deal strategy.

A greater degree of information
 

In a sales process, often several potential buyers are invited to take part, who all carry out their own due diligence. A vendor due diligence investigation can result in considerable savings in time and costs and allow you to maintain a tight divestment process. Although vendor due diligence does not make buyers' own research redundant, the amount of work is considerably reduced and limited in time. In addition, it gives more control over the sale process and strengthens the quality of the information to be provided to buyers.
 

Our due diligence professionals are adept at providing vendor due diligence services across a wide range of industries and clients. We help ensure that your vendor due diligence reports provide a consistent sales message, whilst maintaining a robust and independent view which will instill confidence in the potential buyers.
 

Working closely with your team, we help to identify and resolve issues in the divestment process and provide a vendor due diligence report which enables you to retain control of the process and protect value, whilst reducing disruption to the existing business.
 

Our services normally go hand-in-hand with a managed sale process and controlled data room access. We work with you to agree the scope of work, pulling in expertise as required from our wide range of specialists in the business (finance, tax, operational, commercial, strategic, pensions, IT, etc.).

Solid financials as the backbone of your transaction
 

A key requisite in an M&A transaction is the availability of the financial statements of the target business. They are critical for valuation purposes, but also necessary for due diligence and are the basis for representations and warranties in the SPA.
 

When the target business represents a carve-out from a larger group or company, the target’s financial statements might not be readily available or granular enough. The preparation of appropriate carve-out financials during the deal preparation phase is essential for a smooth transaction process. However, it can be particularly complex and time-consuming.
 

Using our data analytics capability, we can assist with the creation of a robust set of carve-out financials whereby multiple data sources, allocation rules, and adjustments are leveraged and combined, with a clear trail to audited financials, taking the burden off your management team.

Key topics for consideration include:
 

• Standalone cost base: interdependencies between target and remaining business and impact from future TSA/SLA/MSA
• Pro forma impacts from separation
• One-time separation costs
• Basis of preparation/GAAP adjustments

Finally, we can support you in assessing the impact of applying a different accounting standard (e.g. IFRS diagnostic) to ensure that all material potential accounting impacts resulting from the contemplated transaction are captured accurately and in a timely manner

Optimising the outcome
 

As a precursor or an alternative to a vendor due diligence report, a seller can make a factbook or vendor assist report, which is lighter and less time-consuming, when considering the sale of all or part of its business.
 

The aim of the vendor assist is to provide prospective buyers with reliable and consistent figures and analyses which form the basis for their valuation and due diligence.
 

We offer a broad set of options for our vendor assist services, ranging from a factbook to a more comprehensive vendor assist report:

• A factbook is a data book containing a solid and consistent set of financials for the object of the transaction, as well as key analyses that are required for a potential buyer to prepare their valuation. If necessary, we use modern techniques such as data analytics to create non-existent information from available data.
• A vendor assist report also often includes additional information and a more detailed description about other aspects of the company, such as the business model, key trends in financial performance, explanation of the key value drivers, taxation or other elements.

The scope of a vendor assist can be fully adapted to fulfil the specific requirements of your divestment process. A vendor assist is provided to potential buyers on a non-reliance basis only.

Harnessing data to deliver insights for end-to-end M&A
 

Deloitte's Transaction Services Analytics team is made up of highly skilled practitioners who use a suite of analytical tools and approaches along with financial expertise to deliver analysis and insights for end-to-end M&A value creation.
 

We turn the data that your company generates into an equity story, deal insights, and opportunities for growth. We help prepare you in advance for exit processes, during deal execution and due diligence, and post-deal or strategically for value creation.

Our expertise lies in harnessing data to provide deeper, more valuable insights by using advanced data analytics and visualisation techniques combined with industry knowledge and investor areas of focus to develop and understand the underlying business drivers. This enables us to:

• Process large datasets and identify trends, relationships, key risks, and synergies that conventional due diligence techniques cannot achieve within typical deal timeframes
• Unlock the power of a target’s data by synthesizing data from multiple sources (structured/unstructured) or blending company data with third party data assets (census, geolocation, weather)
• Get right to the heart of key deal hypotheses, i.e. what are the principal questions that due diligence needs to answer and what are the key ‘must haves’ to make the deal, and present the answers in a clear way
• Analyse more granular data (including big data) and generate deeper and more valuable insights into the target’s value drivers
• Examine datasets at a greater speed leading to early identification of key issues and risks

Our teams work hand-in-hand with the financial due diligence teams to guarantee consistency and credibility, and bring additional value to our clients.

We work with a wide range of organisations of differing sizes and requirements across all industry sectors. Our focused approach and ability to generate insights quickly means that our clients range from listed telecoms providers to owner-managed businesses.

Significant advantage in the deal process

With a dedicated team of specialists in our due diligence practice, we can advise buyers and sellers across a whole range of industry sectors, geographies, and deal sizes.

We advise clients on the cash accounting implications of the sale and purchase agreement (SPA) they are negotiating, translating due diligence findings into solid protection clauses and mechanisms of the transaction contract. This includes advice on purchase price adjustment mechanisms, locked box mechanisms, or the structure of completion accounts policies.

It helps clients achieve a clean exit at a predictable price and avoid disputes (sell side) or put in place appropriate remedies and purchase price adjustments if the business’ financial position is not as expected (buy side).

Whenever you are making a transaction, our teams can assist with:

• Structuring the purchase price adjustment mechanism
• A locked box mechanism
• Agreeing net asset or normal working capital targets
• Accounting policies and definitions for the completion accounts
• Accounting warranties and indemnities