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For example, we always conduct due diligence on the company's financial performance, examining financial statements, revenue sources, cash flow, profitability, cash consumption, and the overall financial health of the company. In this assessment, we also analyze the company's debts and liabilities, potential tax exposure for both the company and its shareholders, and look for financial red flags. We perform our due diligence on the company's historical performance and develop projections for the target company going forward, which provides our clients the clearest financial picture of the company and its viability as a long-term investment opportunity.
Having an understanding and knowledge of the market position and potential future growth of the target is an accountability as part of any successful acquisition. Their market position will fundamentally shape a successful acquisition. Our commercial due diligence develops an understanding of the company's competitive environment, market share, customer base, and overall market trends. This knowledge, and insight, enables an understanding of the target's business model, relationships with key customers, as well as the potential for future growth of revenue to ensure the acquisition is aligned with long term strategic direction.
Legal Due DiligenceIt is crucial to understand the legal standing of a target to protect against future potential liabilities. We carefully evaluate all legal documents (i.e., any contracts and agreements, pending litigation, etc.) and compliance (i.e. with industry regulations, and protections to intellectual property) to make sure it isn't legally "broken", and you are aware (before the deal is closed) of the potential legal liabilities.
Understanding the operation of a target is important in understanding its value. Our work examines the operational efficiency from day-to-day processes to supply chain and production processes to identify potential synergies or inefficiencies. This includes people including workforce and key employees, Information Technology (IT) systems, and operational procedures to understand the true operational potential and potential improvement opportunities after the acquisition.
In addition to identifying the risks you have today, we provide you with scenario planning to assess how risks could unfold in the period after the transaction. We set a plan to help you manage those risks whether they are regulatory, market, or operational, and realize you will be better equipped to manage anything unforeseen. Our due diligence and other assessments should give you enough information to either proceed, renegotiate, or walk away.
It is essential to understand how value will be created through synergy as part of due diligence. We assess how the target's assets, capabilities, and market stature can leverage your assets, capabilities, and develop a plan that can either reduce costs, improve operations, or boost revenues. In doing so, we will help your organization maximize the value of the acquisition and help you ensure the transaction delivers on its value propositions.
