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Diligence and Sell-Side Advisory Services
Corporate due diligence: Everything you need to know
Whether you’re looking to exit a business or selling to finance growth, corporate due diligence is a critical component of the M&A life cycle. Deloitte’s corporate due diligence and sell-side advisory services can help organizations pinpoint portfolio value and minimize disruptions.
- How sell-side advisory services can help create value
- Portfolio strategy
- Commercial assessment
- Operational assessment
- Functional assessments
How sell-side advisory services can help create value
Maximize shareholder value
Sell-side advisory services can identify businesses best positioned for growth and focus on selling or winding down businesses in noncore or unattractive markets.
Being a prepared seller can enhance credibility. An in-depth sell-side corporate due diligence report showcases the maturity of the seller, helps articulate the story, enables quicker responses to buyer diligence queries, and helps lend credibility to the entire sales process.
Increase deal value
Sellers should position the asset to provide all buyers with necessary information to drive commitment and promote comparability of the offer.
Manage stranded costs
Identifying and mitigating stranded costs helps minimize impact on the business.
Augment the qualitative story with quantitative detail
Our proprietary analytics tool generates customer insights from transaction data to support the seller narrative.
Minimizing buyer corporate due diligence to a detailed, seller-controlled process enables the management team to focus on business-as-usual operations.
Our sell-side advisory services assess portfolio performance to identify business units positioned for growth or potential candidates for wind-down or divestiture.
We can help you evaluate business unit alignment with corporate strategy.
By analyzing performance of business units over time and across comparable benchmarks, you can identify factors contributing to underperformance or overperformance.
Identification of carve-out or sale candidates
Sellers should pinpoint business units that are noncore or underperforming and assess the value of winding down operations or divesting in the business.
Corporate due diligence is necessary to help articulate the value of the business relative to competitors while shaping the commercial narrative and inputs for commercial sales materials.
Identifying market drivers and trends is critical to assess the addressable market, growth potential, and adjacent opportunities.
By assessing positioning relative to key competitors and points of differentiation, we can frame value of the business being sold.
Interviewing customers to understand their purchasing behaviors and perception of industry players helps analyze underlying drivers of customer retention.
Sell-side advisory services and corporate due diligence should entail evaluating the efficiency of the organization while defining the business being divested and related stand-alone cost structure.
Carve out strategy and stand-alone cost
Define what assets and capabilities will be in included in the transaction and the impact that will have on continuing operations. Then, it’s easier to determine the stand-alone cost structure of operating the business without support from parent company.
Manage stranded costs
Proactively identifying and managing stranded costs has a significant impact on post-separation effectiveness.
Identifying value creation opportunities that can quickly be implemented increases value potential.
Cost of separation
Sellers should determine potential one-time costs resulting from separating and standing up operations.
Before selling, companies should assess the complexity of business entanglements and need for requisite transition service agreements (TSAs) and reverse TSAs to determine TSA durations and pricing.
Conducting functional deep dives helps optimize transaction value and reduce the level of disruption during the sale process.
Our sell-side advisory services find opportunities to optimize processes and operating model and estimate the costs to achieve.
Due diligence includes evaluating employment transfer methodologies, succession plans and key retention considerations, collective bargaining agreements, and work council agreements.
Asessing the business’ dependence on the IT organization helps define competitive advantage, cost to separate, and contractual obligations that might prevent transferring or assigning assets or licenses.
An assessment of logistics spending by type can identify opportunities to optimize inter- and intracompany freight operations and vendor sourcing.
Defining plant levels of efficiency and profitability, performing value stream mapping, and evaluating machine operational metrics help identify capex requirements.
Analyzing vendor payment terms and thresholds can lead companies to achieve discounts. Aggregate vendor spend by type, vendor, location, freight, transit time, and payment terms to identify optimization opportunities.
Sales and marketing
Sellers should assess their sales pipeline and strength of customer relationships, evaluate historical sales employee performance, and analyze the effectiveness of marketing spend and marketing campaign ROI.
Transaction readiness services facilitate the sales process through creation of sales materials and management of data-sharing.
Prepare sales materials
This includes help crafting the confidential information memorandum (CIM) for potential buyers.
We can assist sellers with responding to potential buyer inquiries and managing the data room.
Collaborate with bankers
By working with sell-side bankers throughout the transaction process, we can ensure consistent messaging.
On the board's agenda: Key elements to the M&A due diligence process
Divestitures and separations