Financial due diligence (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.

Potential issues

You want to strengthen your company’s core business by acquiring rival products that are almost identical in function/performance to your own

  • You need to build on your company’s existing activities by purchasing complementary products
  • You want to purchase a company to gain access to its existing products in new markets, or to increase your customer base
  • 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
  • You want to spread your company’s market risk by purchasing a company providing similar products or services in another country

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

Vendor assistance is potentially more suitable in situations where the likely purchasers are trade buyers and can be less time consuming than 'full scope' vendor due diligence. The key difference between vendor due diligence and vendor assistance is that the latter is provided for the benefit of the vendor only.

More about PwC's financial due diligence services

  • Vendor due diligence is an in-depth report on the financial health of a company that is being sold. It provides vendors with greater control over the sale process and the timing of sale, which can, in turn, help secure a higher price for the business
  • Vendor assistance provides bespoke solutions to assist vendors in successfully completing divestments. Vendor assistance is provided for the benefit of the vendor only

Contact us

Simon Perry

Senior Partner, PwC Channel Islands

Tel: +44 7781 125152

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