...that goes beyond being a compliance exercise
Whether it is a significant restructuring event or a potential transaction that involves fundraising/selling or buying, our approach to due diligence can help get under the skin of what drives profit and, ultimately, cash within a business (whilst factoring in the key commercial considerations).
Our due diligence processes involve a thorough but collaborative approach, working in a buy-side or sell-side capacity. The bottom line is that we seek to help increase the chances of a successful transaction by providing quality due diligence that provides reliance on the sustainability of an investment, drives attention to potential growth opportunities and demonstrates how an investor can add additional value. All of this while highlighting the key risk areas that need to be managed.
Prepare for due diligence:
It is our job to understand the equity story and present more than just numbers. Prior to any transaction event, we want to help management teams decide what the next steps to create value are and as part of this we can support a business to prepare for a due diligence process.
This role is typically undertaken in a sell-side capacity and can help a business prepare for a potential sale or investment (whether that is debt or equity). We look to challenge with key questions such as; “can you demonstrate debt serviceability and key product focus?” or, “can you identify gaps in your growth strategy that a potential buyer could fill?”. We look to provide a financial databook or a financial factbook that can support both an M&A team in their role to market the business or to help buyers get up to speed on the financials that sit underneath the market opportunity of buying your business – these outputs can also be provided to buy-side advisors who are undertaking due diligence to make this process more efficient with fewer surprises so that management teams can focus on the key role of managing the business.
Finally, we are aware that Enterprise to Equity value discussions are becoming increasingly important and we can provide a clear analysis pack that considers different completion mechanism scenarios and the impact they could have on equity value. By preparing for this early means businesses can plan ahead to mitigate any potential issues.
Due diligence approach:
Once a company has agreed on its growth strategy (whether that is to implement an acquisition, disposal or to raise finance via debt or equity), our due diligence approach ensures seamless and reliable support to executing this strategy. We can provide due diligence on the following:
Pre-acquisition/investment due diligence which can be conducted in a number formats depending on the size and complexity of the transaction; from traditional full scope reporting, to succinct red-flag reporting, documenting only the key issues that could present a deal breaking risk, or matters that may have a material impact on the transaction. We provide due diligence to a number of acquisitive corporates, private equity and debt funds.
Vendor due diligence which typically supports a disposal or fund-raise process. By engaging vendor due diligence a company is taking more control of the due diligence process which means any issues that are identified can be managed with the associated risk mitigated. Producing a vendor due diligence report that underpins the sales documents enhances credibility and allows company management to focus on the day to day running of the business avoiding the need to answer multiple diligence questions from a variety of interested parties – this is centralised through the vendor due diligence report.
PKF Francis Clark were key to supporting our acquisition of Beauty Flash, providing due diligence services on GSL, Beauty Flash and GRG for the purposes of obtaining funding from Connection Capital. The approach taken to carry out due diligence, and the flexibility to report under pressure, helped us meet the required deadlines on an important transaction for us.
PKF were appointed by our principal funder to undertake very detailed financial due diligence work on Prima Bakeries Ltd and the acquisition target, Cornish Premier Pasties Ltd. At first this appeared very daunting due to the size and scope of the work involved. However, Sam Phillips and his team very skilfully broke the work down into bite-size chunks, which allowed us to fully understand what they needed. Despite a short deadline, they were very patient and thorough and were friendly and professional at all times.