Transaction services

Overview

When a company decides to sell or divest a part of its business, it needs to present a detailed, independent report on its financial health to potential buyers. This process, known as vendor due diligence, involves a thorough assessment of the business being sold, initiated by the vendor at the start of the sale process and directed to the buyer.

Our vendor due diligence team offers reassurance to both buyers (acquirers) and sellers (vendors) by providing an unbiased perspective on the business, covering its performance and future potential. We address the concerns and issues that might matter to even the most demanding buyer, typically examining financial, commercial, tax, human resource, legal, and IT aspects.

Vendor due diligence benefits both parties. Sellers gain early insights into potential issues, preventing their management team from being overwhelmed by multiple potential buyers. It also gives vendors more control over the sale process and the timing, potentially leading to a higher sales price. Buyers, on the other hand, save time and costs associated with conducting their own due diligence. Vendor due diligence empowers vendors with greater control and strategic positioning throughout the sales process.

Challenges you might encounter

• Your approach is focused on enhancing the appeal of your business for potential buyers, whether by separating specific units or selling existing entities.
• You aim to maintain control over the sale process.
• Your company is undergoing a transformation tore-focus its activities.
• You intend to realign your portfolio to concentrate on core businesses or to deliver value back to shareholders.
• You’re experiencing pressure from financiers due to declining financial ratios.

How can we help?

• Empower vendors to take charge of the sale process, manage information, and control timing. This approach can help achieve a higher business valuation by reducing the uncertainty discount in bidders’ assessments.
• Offer purchasers a clearer understanding of the business nature and cash flow characteristics. This clarity aids in making informed pricing decisions and determining the appropriate level of gearing the structure can support.
• Facilitate the management of stakeholder expectations.
• Provide valuable insight and optimise time usage during the exclusivity phase of your sale process.
• Minimise business disruptionby maintaining a controlled sale process.
• Reduce the necessity for extra due diligence work.
• Ensure a controlled release of sensitive company information to shortlisted bidders.
• Enhance the credibility of the facts, figures, and information in the sales information memorandum, addressing issues raised early in the process.
• Eliminate the need for buyers to conduct extensive due diligence, as they can rely on the vendor due diligence report.
• Identify value-critical issues early, allowing for a"regroup and fix" strategy away from public scrutiny.
• Lower uncertainty risk for financial buyers, potentially leading to higher offers.

Challenges you might face

• Your company's strategy involves disposing of part of the business, whether through a carve-out of business units, or by the sale of existing entities.
• Your company is in the process of restructuring or re-focusing its activities.
• You want to reposition your portfolio tofocus on core businesses or return value to shareholders.
• You have started to feel pressure from financiers due to deteriorating financial ratios.

How can we help?

• We empower vendors with greater control over the disposal process, helping secure a higher price for the business.
• We reduce business disruptionby making the disposal process more controlled.
• We add credibility to the financial drivers and information provided in the sales memorandum.
• Our vendor assistance team ensures the vendor maintains pace and initiative throughout the sale process.
• We allow management early ownership of facts to address problems, providing the option to ‘regroup and fix’ away from public scrutiny.
• We ensure rapid execution of the divestment from the announcement point, reducing business disruption and speeding up the transfer to new owners.

Challenges you might face

• You’re considering a deal and want to weigh the benefits of completion mechanisms (like completion accounts or locked box) in your transaction’s context.
• You’re making a disposal and wish to guard against price erosion by potential acquirers, both through the determination of the consideration to be paid and through the post-completion mechanism.
• You’re acquiring and wish to ensure that potential 'debt-like' items and other financial risks have been identified and appropriately addressed through a completion pricing mechanism within the SPA, or through warranties and indemnities.
• The transaction being contemplated includes a post-completion pricing mechanism, and you are seeking to position the SPA to your advantage to minimise the opposing party's potential to influence the price.

How can we help?

• We can help you and your advisers consider adjustments between Enterprise Value and Equity Value, and develop arguments and counter-arguments to support your approach.
• We can guide you in determining the right financial benchmarks (or adjustments to price in the case of a 'locked box' (fixed price) mechanism) and related arguments forprice negotiation and SPA drafting.
• We can assist you in analysing the business’s working capital needs to help you determine the normalised working capital for your SPA negotiation.
• We can collaborate with you and your financial due diligence team to mitigate risks identified during due diligence. We can advise on the accounting aspects of the SPA, including the price mechanism, relevant representations and warranties (if any), other accounting-related clauses of the SPA, and any dispute resolution mechanisms related to the purchase price adjustment (including as appropriate, consideration of tax-related items).

For acquisitions, we focus on:

• Identifying appropriate targets.
• Raising the necessary finance.
• Resolving valuation differences between seller and buyer.
• Ensuring the deal is successful.

In terms of divestitures, our work may include:

• Crafting divestiture strategy.
• Planning and executing transactions.
• Identifying potential investors.
• Assisting throughout the disposal process.