In the current market there are many businesses looking to grow through strategic acquisitions. While an acquisition is one of the quickest paths to growth it’s not always the surest, and too often, stakeholders do not get the value promised from the deal.
When considering an acquisition target, and prior to undertaking the acquisition (no matter how good the transaction or deal may seem), it’s crucial to undertake thorough due diligence.
Not only will the results of due diligence guide your decision on whether to proceed with the transaction, but it will also assist you with legal recourse if misrepresentations have been made by the seller.
Due diligence, can be defined as a complete investigation of an intended acquisition. This investigation of the acquisition must include:
* All of its important accounting and financial data;
* Pertinent legal documents such as exclusive contracts, patents, and trademarks;
* Current management team;
* The market for the service or product and its competition;
* The long-term prospects of its particular industry or segment;
* Value of the company’s assets which are to be acquired.
Comprehensive due diligence will make sure you understand what risks are inherent, what risks are avoidable and where you can negotiate value.
Prospective buyers should be provided with the businesses historical financial statements, tax returns, budgets, and an array of other detailed financial and legal information. Your advisor should pore over these statements in order to assure you that the company is in the financial condition as represented by the seller.
At Maxim we have a dedicated team to provide specialist financial due diligence advice which will enhance your understanding of the target business through the provision of a due diligence report that will demonstrate our commercial and financial industry-specific perspectives to guide the valuation and decision making process.
Building financial and commercial confidence through the utilisation of our knowledge and experience is at the heart of how we approach our clients and their businesses.