Multidisciplinary Due Diligence

Financial DD

Financial due diligence examines the financial performance and key business drivers of the target business. FDD provides support in deal decision making and negotiation by highlighting relevant sources of financial value and risk, thus increasing the chances of successful transaction. Key focus areas in FDD are valuation related items Quality of Earnings, working capital and net debt. Analysis of financial information typically involves handling large data masses, hence Analytics is an important part of FDD, enabling analysis and visualisation in clean and concise manner.

• Case Epassi
• Case Valmet
• Case Encore

Accounting policies & pre-deal PPA

Target’s accounting policy assessment and pre-deal PPA provide insights into expected impacts to the Financial reporting and KPIs. Relevance of these services is dependent on materiality and structure of the contemplated transaction. Pre-deal work might be required to prepare the financial information to be included a listing document. Pre-deal accounting policy assessment and PPA will initiate the processes in advance to ease the closing process and the following financial reporting. 

Tax DD

Focus of analysis is identifying target’s historical tax risks that will transfer to the buyer. We will give clear recommendations on how to take potential risks into account in the context of a transaction, i.e., request reduction in the purchase price or protection in the SPA. We will also address potential unutilized tax opportunities. Key areas are tax audits and disputes, current tax position and deferred taxes as well as M&A activities and restructurings. In addition, we will provide an overview of transfer pricing and related party transactions in general. Other analysed areas are payroll taxation, e.g. with respect to incentives, and value added taxation. 

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• Case Kinland
• Case Delete

Legal DD

Legal due diligence focuses on identifying legal risk items relating to the target which are significant in the context of the contemplated transaction and should be taken into account in the SPA, the deal valuation or in the post-transaction integration. The scope of review is tailored based on client’s needs and the transaction at hand, but typical areas covered are e.g. corporate and employment matters, financial arrangements, commercial agreements, real estate, intellectual property rights, data protection and, claims and disputes. We report identified risks to the client together with our recommendations on how the findings should be handled in the context of the transaction.

• Case Kinland
• Case IKH

Commercial DD

Commercial due diligence relates to the examination of market dynamics, competitive landscapes, and financial performance. It provides insights into potential risks, growth opportunities, and industry trends, aiding investors, companies, and stakeholders in making informed decisions. Commercial DD is particularly valuable for those considering mergers, acquisitions, or investments, helping them understand the commercial viability and potential challenges associated with the target business.

Operational DD

ODD is forward-looking and answers the question “What are we going to do with the asset, when it is ours?” ODD complements the risk-oriented types of due diligence to maximize the return on M&A investments. ODD scope is tailored according to value creation hypotheses and acquisition target characteristics.

ODD is often closely linked with FDD and may cover one or several of the following components:

• EBITDA and cash upsides (as a standalone)
• synergies and implementation costs
• separation issues, transitional considerations and standalone costs (EBITDA adjustments)
• specific operational/functional assessments.

ODD is typically conducted in close collaboration with client team to move seamlessly from diligence to operational planning and execution phase, and to accelerate the value creation.

HR DD

A big piece of a company´s performance is linked to its people and the way the organization is designed to allow for employees to perform the way they do. An HR due diligence will provide insight on people related aspects by focusing on the organization, talent, culture, and leadership assessments in addition to traditional analysis on employment and labor, compensation, benefits and HR practices. Besides providing input on employee compliance and risk issues, HR DD should also be viewed as a catalyst for rapid integration planning and execution. 

• Case Colas

IT DD

In the information technology era, most of the due diligences require also an examination of IT assets, systems, processes, policies and procedures before a transaction. The IT DD will help the client understand those matters that can have a material impact on the value of the business in scope and that need to be accounted for prior to deal signing, such as potential deal breakers, key strengths and synergies. Our IT assessment is structured along the following:

• General focus areas: The capability of the business to support its IT strategy & projects, the IT organisation & third-parties, the robustness and scalability of the IT landscape, the operational resilience of the IT organisation (cybersecurity, business continuity, etc.) and the analysis of the IT expenditure to support the IT current needs and future aspirations.
• Specific focus areas: Deloitte will discuss with the client if a more tailored IT DD approach is desired next to the general focus areas. Examples of possible specific focus areas include but are not limited to: compliance assessment with specific standards & regulations, data architecture & information flow, advanced model governance reviews (AI/ML), and a scalability/reliability/customization assessment of digital platforms.
  

Our IT Due Diligence provides the buyers a clear view of the IT capabilities of any target, identifies and assesses key risks in the target’s technology and business functions, and determines the potential impacts on the deal. Besides providing input on technology compliance and risk issues, IT DD should also be viewed as a catalyst for successful integration planning and deal execution.

• Pilviratkaisujen ennakoiva hyödyntäminen tuo merkittäviä etuja yritysjärjestelyssä – myyjä voi kasvattaa kohteen arvoa ja lyhentää siirtymäaikaa

Software DD

If a potential target is a software company or software-enable business services, specialized software due diligence is highly recommended. Software due diligence provides support in deal decision making by identifying any potential risks by focusing on software product capabilities, technology stack, technical debt, system architecture, future development roadmap, software/product development team and processes, patents and if needed running a source code scan.

Cyber DD

Cyber due diligence provides insight on target’s security posture and aims to uncover potential cyber risk exposures and their potential impact to valuation pre-transaction.

• Cyber reconnaissance analyzes the target’s external network footprint and baselines the attack surface area to provide an outside-in view of the target’s security posture.
• Cyber strategy review provides a view of the state of cyber within the target by reviewing cyber risk and governance practices, cyber security development program and the implementation status of key cyber security controls.
• Software vulnerability analysis of the target’s software libraries against Common Vulnerabilities and Exposures (CVE)-MITRE helps to identify critical vulnerabilities.
• Breach and attack simulation (BAS) facilitates to identify opportunities to enhance the target’s security posture and vulnerability assessments i.e. penetration testing activities help to identify key vulnerabilities and reduce potential threats.

ESG DD

ESG due diligence process analyses the compliance of the targets with national and international regulations as binding frameworks as well as non-codified stakeholder ESG-related norms and expectations. Further, ESG due diligence highlights the environmental, social, and governance status-quo of a company. With regards to the environmental dimension, a due diligence includes the existence of internal policies, responsibilities and management with regards to several environmental aspects (esp. energy, CO2 emissions, materials, water usage and waste) summarizing the ecological impact of the business model as well as how it interacts with all key environmental stakeholders and works to mitigate its impacts.

The social dimension covers policies and responsibilities concerning social aspects, such as human rights, labor standards, health & safety, diversity and equal opportunities among others. Finally, the governance dimension constitutes of analyzing the risk management systems, the existence of corporate codes of conduct (anti-bribery, anti-corruption, etc.) and the transparency of board and management decisions and remuneration.
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• Case Delete
• Vastuullisuudesta puhutaan kaikkialla – miten ESG-tekijät vaikuttavat päätöksiin yritysjärjestelyissä?

Integrity DD

Integrity due diligence carries out background checks in the focus areas. We focus on reviewing e.g. the background and activities of the business, the ownership structure, any other corporate affiliation of the business partner or its representatives, or the sanctions and PEP (politically exposed person) representation and other possible red flags such as ethical and corruptions risks. The focus areas and scopes of each background check are carefully reviewed with the client before starting the assignment. We use our professional expertise and experience to determine the best possible research content in order to meet the client’s goals. Our extensive international network enables us to carry out background checks around the world.

• What can integrity due diligence reveal about management?

Forensic DD

Forensic due diligence provides an objective review of the target company's operating methods, specific policies, the maturity level of relevant guidelines and processes, financial data and possible red flags. Typically, it focuses on reputation, reliability, non-compliance with legislation, operational practices and risks related to processes. This is not a "one-size-fits-all" due diligence process, instead it is always tailored according to the object of the transaction and the nature of the business. A forensic DD report may inter alia include the following: review of operating methods and processes, data analysis of the target’s financial data, background checks on the target company and its key individuals, and maturity and readiness assessments related to the prevention and management of misconduct, bribery and corruption.

• Forensic Due Diligence – mitä se tarkoittaa?