Buying or selling a company is an extremely technical and stressful process. Quite apart from the negotiation of terms, there are a host of other challenging issues which must be dealt with, all the while keeping your existing business focused on its core competencies. It is often impossible for a management team to complete a transaction without extensive support from external advisors.
A competent external advisor will know when to get you and your management team involved in the process and when to get them to pull back and concentrate on managing the existing business.
Our due diligence and transaction support team is led by Patrick O’Hare who has extensive Corporate Finance experience with one of Ireland’s largest and most active consultancy firms, completing business sales and acquisitions for a wide range of clients. He also has experience of acquiring a business while part of a management team and has thus seen the transaction support function from both sides of the fence.
Due diligence is most often carried out when a client is acquiring a new business. It involves a team of professionals examining the books and records of a target company to ensure the condition and previous of the business is clearly understood by the acquirer.
Due diligence investigations can take weeks rather than days and should at the very least include reviews of the following:
Legal
· Legal issues relating to the contract
· Legal issues relating to title or litigation
· Potential disputes and their likely effects on the business
· Status of any Intellectual Property owned by the business
Financial
· Historical and future earnings and assets
· Financial controls and systems
· Historical and future capital investment
· Unusual commercial arrangements
· Future cash flow and funding requirements
· Contingent liabilities (intangible potential liabilities)
· Taxation status
Commercial/Market
· Details of employees and terms of employment
· Customers (at a later stage to reassure the vendor regarding confidentiality)
· Environmental matters
· Pension integration and funding
· Production systems and processes
· Adequacy of existing insurance cover
The above lists are only the bare bones of what needs to be covered by a due diligence exercise. Most transactions involve significantly more detail than this and final reports can be very extensive.
While the due diligence exercise is being completed, there are a number of key aspects to think about:
· Change management.
· Training new staff.
· Ensuring cultural integration.
· Maintaining customer and sales focus and planning motivation.
· IT issues
To cover aspects of the due diligence exercise outside our expertise, OHD has alliances with commercial lawyers, pension advisors, change management consultants and HR advisors.
For more information on this service please contact:
Patrick O’Hare
Tel: 046 943 7900
Mob: 086 608 8869
Email: pohare@ohd.ie
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