Due Diligence

Addressing critical issues

You’re thinking of buying a business and have some background information on your target. You may well have started to look at funding your acquisition. How much reliance can you put on the information you have and how do you check that there aren’t further significant issues that you aren’t aware of? This is where financial due diligence plays a key role in any proposed transaction.

Our team of experienced professionals has many years’ experience of looking at businesses to assess the quality of the information that they produce. Included in our work will be an examination of specific issues that you have identified for clarification or further detailed assessment.

We will give our opinion on the key issues that have emerged from our examination and which, should it then be necessary, will enable you to revise your plans and assumptions.

Critical Information

Most due diligence work will bring to light some information or issues that will influence your decision-making process.  Whilst it is rare that this information is of such fundamental importance that it will break a deal, it can and has saved some purchasers from losing large sums of money on businesses with major hidden problems.

One recent due diligence report revealed a large claim against a target company which potentially would have forced the company into liquidation if successful.

The finance director had kept this secret from the rest of his board and from the potential purchaser. How much better to be aware of this before you commit to buying the company rather than becoming embroiled in warranty claims after the purchase?

How we can help

Our service will check the assumptions underpinning your plans and provide reassurance that your decisions are based on full and accurate information.

There are several key stages to the financial due diligence process:

• Meeting with you to discuss in detail your plans and assumptions so that we fully understand your motivation for the proposed acquisition and the key issues for you.
• Preparing a detailed schedule of work for our assignment and agreeing this with you to ensure that we meet all of your needs.
• Information gathering, which can include various background checks on the target business, meeting with its internal and external accountants, reviewing audit files and then a visit to the company to review key documentation and records and to discuss the business with the proprietors and key employees.
• Preparation of a draft report, highlighting significant issues and making specific recommendations for addressing them.
• Discussion of the draft report with the vendors of the business, to present our findings.
• Discussion of the draft report with you to report our findings and to discuss any key issues that impact on your proposed deal, and if necessary to agree further work that may be required.
• A review of your business plan and forecasts in light of the findings of our report to help you to update your proposals.

Meeting your exact needs

Our approach to financial due diligence is flexible and tailored to your specific needs. Whether you want an extensive, full due diligence review of a business or simply want us to use our expertise to check out certain aspects of a target, we will work with you to provide you with the information that you need when you need it for your decision making.

Independent Business Review

Independent Business Reviews often incorporate many of the elements of a due diligence assignment but are used in more varied circumstances. They will often look at broader issues than the financial health of the business and frequently incorporate a valuation of the business.

For funders, the objective of due diligence is to report on the adequacy of financial systems and controls and to review and comment on the achievability of the financial forecasts and key sensitives.

For purchasers, they provide additional assurance that the purchase price of the company they are buying is fair.

An independent business review can also be a useful tool for appraising your own company.

For further information please contact Bob Gore T: 0161 817 6100  E: bob.gore@mitchellcharlesworth.co.uk or Paul McGerty T: 0151 255 2300  E:paul.mcgerty@mitchellcharlesworth.co.uk