Once an approach has been made to a potential target to explore the interest in an acquisition, Due Diligence can begin. Due Diligence is the process of gathering data about the target, usually by asking them to provide that information. This can be combined with other publicly available information, e.g. data from Companies House, to develop synergy opportunities, capture risks, issues and assumptions; and develop the final valuation for the target.
The target is under no obligation to share any information, but will generally do so where they are supportive of the deal, and it will not undermine them competitively. Due Diligence always takes place under stringent conditions of non-disclosure and confidentiality.
Due Diligence is not solely a financial or legal process, though these are important elements. Operational Due Diligence should form the bulk of the activity, covering detail on processes, people & skills, technology, property, suppliers, etc. It is this information that provides input into the development of synergy opportunities and risks which may derail the acquisition.
Large companies undertaking Due Diligence take this process seriously, with large teams and thousands of points of information being gathered. For SMEs with more limited resources, a more targeted approach must be taken.
RitchieHogg will work with you and your other advisors to identify the critical information you need to gather. We will manage the Due Diligence process, minimising the time required, while maximising the value of this activity. A final report will be prepared, summarising the key outputs, including:
- Factors influencing target valuation
- Major issues which may stop the deal
- Risks to be addressed in Integration
- Assumptions which could not be validated
The information gathered will be managed securely, and if the deal does not proceed, can be destroyed to maintain the confidentiality of the target.
In the event of a particularly complex deal, we can manage the Due Diligence process in a 'Clean Team' environment, where a joint team of buyer and seller staff can work together under set confidentiality rules. This allows more detailed assessment to be carried out, which maintaining a higher degree of secrecy.
Good Due Diligence can make or break your deal. RitchieHogg has the experience and knowledge to shape and run this for your deals. Arrange an initial discussion to find out more: