Value Creation Services
Value creation is about helping our Clients to make their business more successful regardless of its current situation. Our approach is tailored to the needs of our Clients’ situation such as acquisitions, divestments, transformations or facing the need for turnaround.
Please see the traditional financial advisory services Deloitte provides to its Clients in corporate Mergers and Acquisitions (M&A)
Following a successful transaction, to ensure the alignment of functions and processes with transaction plans and to capture planned synergies are top priorities. In order to achieve a successful implementation, thorough Day One preparation is critical as well as the development of the first 100-Day Plan.
Our team will prepare with local teams and develop the necessary check-lists based on functional requirements and blueprints, process mapping, or gap analyses to ensure the efficient start of the new operation.
Deloitte provides an independent analysis of identified synergies to support deal valuation.
Our approach and assessment areas are:
- Assessment of the acquirer’s cost base and comparison with the target’s cost base for each major cost category. Where applicable, a split of non-personnel and personnel costs (and FTE numbers);
- Basis of preparation for the projected Synergy Case, including phasing, associated one-off and ongoing costs;
- Evidence of available support and calculations underlying the assumed synergies and associated one-off and ongoing costs;
- Savings as a percentage of acquirer’s cost base and/or combined cost base for each of the major cost categories;
- Cash and non-cash impact and the in-year and full year financial impact of Synergies on the EBITDA run-rate;
- Identification of key implementation considerations for the integration and potential challenges to the delivery of the proposed synergies in the estimated timeframe.
Professional project management and the right preparation enables the realization of synergies and the intended business impact, while helping local teams to focus on growing the core business in parallel. Depending on the nature of the transaction (integration or separation), or whether it happens across the supply chain or on the same level, different solutions need to be applied.
Our experienced team will support and guide our Clients through the necessary phases from planning through execution to efficient post transaction operation, both in integration and separation scenarios. We will help our Clients to identify key milestones and prepare the right roadmaps, to develop an efficient Target Operating Model and Operating Blueprint, including functional blueprints and organizational structure. Step Plans are drafted based on rigorous gap analyses, and then their implementation is also coordinated by Deloitte experts. Our Clients can expect clear risk, issue, action and decision tracking throughout the project. We also assist our Clients in the commercial drafting and/or negotiation of different agreements (Share-Purchase Agreements “SPA”, Master Service Agreements “MSA”, Transitional Service Agreements “TSAs” or Long Term Agreements ”LTAs”).
Our Commercial Due Diligence (CDD) team works to provide highly customised commercial transaction support to our Clients to provide them with a view on the market dynamics the business they intend to acquire operates in. Our rigorous methodology can investigate the following areas:
• market environment, with a special focus on the competition, market trends as well as other factors affecting market growth
• entity’s offering of products and services
• entity’s client base (our analysis could also include interviewing the target company’s clients)
• the business plan.
Our Clients increasingly are looking to increase transaction value through improving operational performance and proactively managing operational risks.
Our Operational Due Diligence experts can assist with:
• developing an understanding of the target company’s cost base and operational capability, including areas of IT, • reviewing forecast cost reduction plans, synergies,
• reviewing and evaluating operational risks within a business,
• identifying opportunities for further cost reduction and assisting in the development of performance improvement and value capture plans,
• together with our Integration & Separation team, developing plans for the first 100 days to capture value capture and enhance operational benefits.
Working Capital is often described as the ‘lifeblood of a business’ as it represents the operational liquidity of a company. The cells comprising this lifeblood is cash that flows in and out of the business as circulating short-term investments. Maintaining an optimal level of Working Capital can be a challenge for even the most profitable businesses.
• Detailed diagnostic review to identify, quantify and validate cash improvement opportunities
• Historical, internal and external working capital benchmarking
• Actions plans for implementation and hands-on implementation support from design and planning through to benefit realization
• Creation of dynamic working capital dashboards to monitor and drive improved performance
Deloitte’s Top Line Diagnostic Generate EBITDA gains addressing multiple sales opportunities as increasing share of wallet, streamlining channel programs, identifying your most profitable products and customers, improving pricing and limiting price leakage and by addressing commercial operations improvement as go to market model and sales network.
Top Line Diagnostic is a KPI tool to quickly and accurately identify and prioritize revenue and sales operation acceleration levers. It provides insight and prioritization into all areas of the business related to organic growth: product, innovation, pricing, sales force, marketing/promotions, loyalty, share of wallet.
Business plan & cash flow revision: we review and update the assumptions of the current business plan to reflect the market conditions and revise expectations of future performance. We review the current cash flow forecast; identify priority payments (e.g. salaries, critical suppliers) and compare them against available cash. We prepare a 12 week cash flow forecast based on contractual obligations, receivables / payables ledgers, matching payments and receipts.
Stress-testing: we will carry out stress-testing on the most important levers of the business and model its impact on cash and EBITDA.
Scenario analysis: Deloitte can help Clients to test and challenge key assumptions, and to model downside scerarios to help them and their prospective funders to understand actual/potential financing needs.
We provide our Clients an initial review of the current cash management and forecasting procedure in order to identify underperforming areas and potential liquidity needs, we also improve Management’s visibility of the current liquidity position.
Deloitte will evaluate the performance of each Business Unit, review debtor collection and creditor stretching strategy, as well as evaluate other tactical options (debt factoring, invoice discounting, etc.).
Deloitte provides assistance in the identification and implementation of Working Capital improvement measures to deliver quick wins, tangible benefits and a lasting impact on cash generation.
Our Financial Advisory team offers a comprehensive end-to-end financial restructuring service to distressed companies and their stakeholders. At a high level, our services comprise Restructuring Advice, which typically involves preparing an options analysis for stakeholder management, often with a business review.
- Early identification, evaluation and prioritization of the options available to stakeholders are key to achieving a successful outcome. These could include a covenant reset, a refinancing, an amend and extend, a restructuring, a sale of all or part of the business, or maybe an insolvency event.
- When working for the company, we often assist management in their preparation of a robust 'bankable' business plan which can form the basis for a successful Financial Restructuring.
When a company has a looming liquidity issue or is expecting to breach its banking covenants, a business review is often requested by stakeholders in order to establish a sound basis on which to negotiate and move forward. This can be at the Company’s request (Confidential Business Review) or for the Lenders directly (Independent Business Review).
- Our business reviews provide real commercial, operational and financial risk challenge to management's business plans and an evaluation of the risks and potential upsides of meeting the forecasts. Through our multi-level analysis, we establish a realistic set of "post-vulnerability" numbers which form a basis upon which stakeholders can assess future profits and cash flow, and the value of the business with confidence.
We provide a range of services to help our Clients deal with non core or under performing business operations, which have become a drag on the company’s earnings.
We assist our Clients in improving the performance and visibility of the company while reducing the exposure to non-core businesses or markets by identifying the optimal solution for each part of the business.
We also provide assistance in planning the chosen solution and implementing the exit strategy when required to operate seamlessly without impacting stakeholders from Day 1.