Due Diligence
The purpose of financial due diligence is to review the facts and opinions being expressed by a vendor or borrower, prior to a transaction being completed.
This could identify issues which might affect your desire to do the transaction, the amount you are willing to pay / lend or how the transaction should be structured.
We have prepared the following responses to a number of frequently asked questions by our clients:
What is included in a due diligence report?
We offer a choice of due diligence report formats. A traditional report (often preferred by lenders) has the following report structure:
- Historical performance, including any unusual transactions or accounting policies.
- Projected performance, including a sensitivity analysis and a review of the assumptions used.
- Assets, including ownership and valuation.
- Liabilities, including financial commitments and contingencies.
- Financial and management controls.
- Management and organisational structure.
- Taxation.
- Other matters, such as pensions and insurance.
A traditional report can often be quite lengthy, so you may prefer an exception report that deals only with issues arising from our due diligence review. Alternatively, the report format and our scope of work can be entirely to your own requirements.
Who carries out the investigation?
Wherever possible, our due diligence investigations are undertaken by a senior member of our team with a depth of due diligence experience. They deal with you directly, so that you can talk to the person who has actually carried out the review. You also get direct
access to our corporate finance and tax partners.
What are the risks?
The decision to undertake financial due diligence is one of the usual safeguards in acquisition or pre-lending transactions. Nevertheless, there are a number of risks that we believe you should be made fully aware of. For example, these might be a failure by the target
company’s management to fully co-operate with us, or perhaps adverse findings which, in extreme circumstances, could jeopardise the entire transaction. We can discuss the potential risks applicable to your proposed transaction.
What are our fees?
Our fees for due diligence work depend upon the scope of our instructions and the type of report required. Our fees are usually charged at applicable hourly rates, although we can agree a fixed fee with you at the outset. In any event, our fees are charged independently of whether or not the deal completes.
To find out how we can be of service to you, please contact your nearest office or complete the enquiry form below.
| London t: 44 (0)20 7387 5868 |
Solent t: 44 (0)1489 566 700 |
| Portsmouth t: 44 (0)23 9275 4820 |
Thames Valley t: 44 (0)1753 759 000 |
