Category: Consultancy services
Published: Friday, 03 October 2014 12:10
Written by Abdelhamid M. (ACPA)
Financial due diligence service
"Financial due diligence" is an investigation in to the financial affairs of a company prior to its acquisition, disposal, refinancing, restructure, public listing or other similar transaction.
The aim of financial due diligence is to enhance a user’s understanding of key financial information underpinning a corporate transaction, allowing parties to make informed investment decisions.
There are no hard and fast rules of what the due diligence process involves, and each engagement will be individual to the specific transaction. Due diligence is a bridge that must be crossed in nearly all transactions, without it, the risk of problems or failure along the journey are increased.
Our financial due diligence service consists of two major types of due diligence services
- Financial due diligence service (Buy Side)
- Financial due diligence service (Sell Side)
Financial due diligence service (Buy Side)
Any organisation considering a deal needs to check all the assumptions it is making about that deal. Financial due diligence provides peace of mind to both corporate and financial buyers, by analysing and validating all the financial, commercial, operational and strategic assumptions being made. It uses past trading experience to form a view of the future and confirms that there are no 'black holes'.
The components of the service are revenue and market due diligence, synergy validation, maintainable earnings, future cash flows and all operational issues, as well as deal structuring.
Financial due diligence service (Sell Side)
When a company is up for sale - or selling off one of its parts - it needs to show an in-depth report on its financial health to potential buyers. This is called vendor due diligence. Abdelhamid & Co provides comfort to both buyers (acquirers) and sellers (vendors) with an independent view of the business, encompassing its performance and prospects.
Vendor due diligence aims to address the concerns and issues that may be relevant to even the most demanding purchaser. For vendors undertaking a disposal or selling off a part of their own business, vendor assistance provides bespoke solutions to assist you in successfully completing your divestments.
What create demand for Financial due diligence (Buy side):
- Do you need to build on your company’s existing activities by purchasing complementary products?
- Do you want to purchase a company to gain access to its existing products in new markets, or to increase your customer base?
- Do you need to expand your company’s current portfolio of products and services through the acquisition of new ones - potentially to provide a hedge against the movements in the markets in which the company operates?
- Do you want to spread your company’s market risk by purchasing a company in another country?
How we can support you:
- By enhancing the purchaser’s understanding of the target business and therefore increasing the likelihood of the deal achieving its objectives
- By helping you to identify and understand critical success factors and therefore improve your understanding of all the relevant issues so that informed decisions can be made
- By highlighting strengths that can be built upon or weaknesses that can be resolved
What create demand for Financial due diligence (Sell side):
- Does your company’s strategy involve disposing of part of the business, whether through a carve-out of business units, or by the sale of existing entities?
- Is your company in the process of restructuring/re-focusing its activities?
- Do you want to reposition your portfolio focus on core businesses, or return value to shareholders?
- Have you started to feel pressure from financiers as a result of deteriorating financial ratios?
How we can support you:
- Provide vendors with greater control over the sale process and the timing of sale, which can help secure a higher price for the business
- Provide purchasers with greater certainty over the nature of the business and the characteristics of its cash flow. This helps pricing decisions and the level of gearing the structure will support
- Reduce disruption to the business as the sale process is more controlled
- Help add credibility to the facts, figures and information provided in the sales memorandum
- Remove the necessity for a buyer to have substantial access to do their own due diligence work as they will be able to rely on the vendor due diligence report
- Vendor assistance specialists can ensure that the vendor retains pace and initiative throughout the sale process
- Early identification of value critical issues, providing the option to "regroup and fix" outside the glare of publicity
- Rapid execution of the divestment from the point of announcement. This reduces the business disruption and accelerates transfer to new owners
- Reduces uncertainty risk for finance buyers, potentially justifying higher offers
For any inquiries you can chat with us using WhatsApp or Telegram or fill the following form and we will get back to you as soon as possible:
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