Merger & Acquisition
‘Due diligence’ literally means taking appropriate care and is certainly necessary if you want to sell your business or wish to take over another. Or maybe you would like to find out about the financial, fiscal, operational, and legal health of your business?
Are you a trustee requiring assistance with financial and tax issues? This is another situation that requires care and for which a due diligence investigation can provide greater insight. The investigation identifies the risks associated with a company takeover.
Our due diligence investigations help you discover risks and opportunities so that you can make a well-founded and informed decision about whether and how to proceed with the transaction. We do this by:
- Analyzing and assessing the quality of the result and the cash flow;
- Analyzing and verifying the quality of the assets and liabilities to be acquired;
- Evaluating the quality of the working capital and the existing trends in the working capital;
- Providing additional insights in relation to the financial projections of the target firm;
- Assisting in the realization of the purchase agreement.
A due diligence consists of various partial investigations and specific focus areas. The financial due diligence is the main focus. Examples of other partial investigations are:
- Tax due diligence;
- Employment law due diligence;
- Pension due diligence;
- Legal due diligence (business law);
- IT due diligence.
Each partial investigation is conducted by specialists from the relevant discipline at Baat. Every due diligence is concluded with an integrated report containing all the findings from the various partial investigations.
We provide you with the input for a successful transaction. Our due diligence support enables you to:
- make an informed decision as to whether or not to go ahead with the sale or purchase. Because, besides giving you clear facts, we also share our opinion on the deal as a confidential adviser, based on your decision criteria.
- submit a realistic and well-substantiated sale or purchase price, based on the actual factors determining the value of the company.
- determine a suitable legal structure and conditions for the transaction, based on insight into the risks and opportunities relating to the transaction.
You may have plans to sell your business or transfer it to a private limited company. You may be on the verge of buying out other owners, or want to coordinate the value of your business with the tax authorities within the context of a family succession. Or you may even wish to purchase another company.
Whatever your intentions, if you want to know what the value of the company is, it is important that you understand the factors determining the value of the company and apply them carefully. In practice, various methods are used to determine the value of a business. You may already be familiar with the profitability method and the intrinsic value method or a combination of the two. These methods are primarily focused on historical accounting data. In order to sketch a realistic picture of the value of a company, we believe that it is also necessary to determine future-oriented cash flows. This is why we use the ‘Discounted Cash Flow’ method.
The value assessment is primarily based on the company’s expected cash flows in the future and the company’s associated risk profile. The value assessment of a company is a complicated process involving a range of different variables. It requires a good level of knowledge to perform this type of exercise.
Value and price are subjective concepts. You must therefore remember that the value you have in mind for your company will never be the same as the actual price that is paid. Reasons for this include the negotiated result, demand and supply, emotional aspects, financing possibilities, scope for synergy and economies of scale, and innovative strength. And lastly, the starting points for a value assessment also play a role. We will gladly help you reach a good value and price for the company.