Financial due diligence

Coordinated and efficient approach during the buy-side or sell-side process to add value throughout the lifecycle of the transaction

Out of ordinary transactions and projects represent a big challenge for a group or a company. We combine a deep knowledge of the local market as well as a wide experience on multinational engagements with industry-leading consulting skills and methodologies that allows the performance of insightful analysis throughout the full-cycle sale/purchase process leading to great performance and cost efficiency for our clients.

The core part of a buying process is the due diligence. The due diligence is the process of analysing all the aspects of a business situation before making a decision. We are committed to the success of our clients and a successful buyer needs realistic data and a solid action plan. The only way to win a deal is to have a clear understanding of the targets to reach.

Our approach includes a focus on cash flows/EBITDA analysis, gross profit labour and profitability analysis evaluation of the appropriateness of the accounting policies the target implements while preparing its financial statements, historical revenue, cost trends analysis and consistency between historical results, versus budget, and forecast. Moreover, we analyse historical and anticipated capital expenditure levels as well as on the quality of assets and working capital by verifying the historical working capital and its trends.

Similarly, we carefully review both relationships and key terms with top customers, including any rebate agreements, and with suppliers.

Our approach

Buy-side diligence focuses on value drivers and business considerations which are of critical importance to potential buyers, not just on the Target's balance sheet. Grant Thornton's buy-side due diligence services will help you:

• Understand the bridges from the Target's reported financials to the audited financials and the adjusted financials.
• Analyze the basis of presentation to help you make informed decisions in negotiations.
• Validate adjustments provided by Management by analyzing supporting detail/schedules and challenging assumptions.
• Identify key areas of risk or opportunity that can influence purchase agreement negotiations or post-transaction operations/synergy capture.
• "Get the story" behind the Target's financial numbers by understanding the underlying business drivers, not just the numbers.
• Understand whether accounting estimates (e.g., inventory valuation, accrual methodologies, revenue recognition) impact the quality of the Target's earnings.
• Support you in evaluating desirable structures and negotiation tactics to gain real economic value or reduce risk.

Financial due diligence differs significantly from a financial statement audit by providing the ability to explain reasons for business performance changes with a focus on presenting sustainable EBITDA, assessing the quality of your earnings and focusing on last years and most recent trailing twelve months (TTM) periods.

Our expertise

Our team has multiple years of experience in domestic and international operations. We are strongly oriented towards the generation of value for our clients. We can help you identifying the best structure of the operation at the early stage by providing additional services to prepare you for the deal and, at a later stage, to assist you with allocating the possible surplus values.