Financial due diligence

Proactive answers to tricky situations.

About Service

It might be dangerous to buy and sell businesses, assets, or even to participate in large-scale projects. A successful acquisition can be achieved by highlighting opportunities to add value and reducing these risks with the aid of objective due diligence.

In addition, conducting financial due diligence is crucial when deciding whether to move through with a transaction and can raise the chances of the transaction succeeding. The agreement will be structured and you will be ready for discussions thanks to the due diligence procedure.

To assist you in choosing wisely and negotiating better results, TIIN’s global offering includes financial, tax, and other research to pinpoint both the risks and opportunities of a proposed transaction.

We offer assistance in various areas, including:

  1. Financial due diligence
  2. Advice on sale and purchase agreements
  3. Deal mechanisms such as completion accounts and locked boxes
  4. Working capital due diligence
  5. Review of completion accounts
  6. Post-deal support

Why Choose TIIN?

At TIIN, our senior partners, supported by experienced diligence practitioners, actively participate in project delivery. We provide comprehensive and clear opinions on issues, particularly in difficult and complex situations, including cross-border assignments. Our experienced teams dive into the details of the work, offering value-add deliverables that meet your specific deal needs. Here’s how we can help:

  1. Identify critical issues promptly and provide proactive solutions to complex problems
  2. Maintain regular communication, agreeing on a feedback plan and providing updates as work progresses
  3. Focus on high-quality deliverables, offering clear guidance instead of using overly cautious language and caveats
  4. Take a commercial and pragmatic approach

Global Coordination

Efficient international due diligence requires careful planning and strong project management. TIIN firms worldwide possess significant experience and expertise in complex cross-border transactions.

With dedicated teams in major business centers globally, we source local knowledge, leverage existing relationships, and provide on-the-ground support regardless of the transaction type or geographical region.

We effectively manage the challenges that arise in cross-border assignments by:

  1. Appointing a dedicated client service partner as the primary point of contact, coordinating our international team and taking overall responsibility for the assignment
  2. Ensuring consistency in product and service delivery by developing an understanding of your business and future needs
  3. Maintaining consistent due diligence scoping across different jurisdictions
  4. Adopting a common methodology and producing clear and concise reports
  5. Regularly communicating with all key stakeholders throughout the transaction process, keeping you informed of our progress and addressing critical issues as they arise.

Frequently Asked Questions (FAQs)

Financial due diligence is typically conducted prior to a transaction, such as a business acquisition, disposal, or refinancing. Its purpose is to gain a comprehensive understanding of the financial position and performance of the target business, as well as to identify and assess the associated risks. Financial due diligence plays a crucial role in testing and scrutinizing the assumptions made in the valuation of the business outlined in an offer letter or term sheet.

The primary objective of financial due diligence is to evaluate the risks involved in a potential transaction and explore ways to manage, mitigate, or avoid those risks. It involves a thorough investigation and analysis of the business, including a review of the profit and loss account, balance sheet, and cash flows. Additionally, financial due diligence may encompass an assessment of financial projections to gauge their accuracy and reliability.

The scope of work often extends to areas pertinent to the offer letter and completion mechanics. This includes considerations of normalized working capital and pricing adjustments, which are typically achieved through the definition of debt.

The purpose of due diligence is to minimize risk and ensure a comprehensive understanding of a transaction before committing to it. In the context of financial due diligence, parties involved undertake a thorough examination to gather all relevant details. The specific nature of the deal determines the extent of the financial due diligence, which typically encompasses the following:

  1. Comprehensive analysis of historical performance, working capital, cash flows, assets, and liabilities.
  2. Evaluation of the quality of earnings underlying the business.
  3. Identification of factors influencing pricing considerations.
  4. Examination of the tax position of the business.

In certain cases and jurisdictions, we may also scrutinize management’s forecasts, including the working capital requirements of the business.

Our reports include a concise summary of key issues identified during the due diligence process. We provide our perspectives on associated risks and their implications for the deal, including integration and other post-deal considerations.

Due diligence encompasses various forms and is tailored to specific requirements. The scope and depth of a due diligence process are determined by the nature and scale of the potential transaction. Typically, due diligence includes the following components:

  1. Financial due diligence: A thorough examination of the target company’s financial position, performance, and potential risks.

  2. Legal due diligence: An assessment of legal and regulatory compliance, contracts, intellectual property rights, litigation matters, and other legal aspects relevant to the transaction.

  3. Commercial due diligence: An analysis of the target company’s market position, competition, customer base, growth prospects, and overall commercial viability.

  4. IT/Cyber due diligence: Evaluation of the target company’s information technology infrastructure, systems, data security, and potential cyber risks.

  5. Tax due diligence: Assessment of the target company’s tax position, compliance with tax regulations, potential tax liabilities, and tax planning strategies.

  6. Environmental due diligence: Examination of the target company’s environmental practices, compliance with environmental regulations, and identification of any environmental liabilities or risks.

The specific combination and extent of these due diligence components depend on the unique circumstances of each transaction.

European merger and acquisition deals 2023: Global trends and growth factors

European merger and acquisition deals 2023: Global trends and growth factors

By 2023, the mid-market sector’s general environment will still be favorable.

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