We conduct rigorous and effective due diligence for our clients considering a merger or acquisition. Effective pre-acquisition due diligence is important to fully understand the business and operational risks, better analyses financial and operational health, set negotiation parameters, challenge valuation assumptions, uncover potential liabilities exposure and understand the integration risk.
Understanding our clients’ goals
At Ecovis, our first priority is to focus on the problems, goals, and issues important to our clients. Our concentrated client-focused approach ensures that we are delivering exactly what our clients need.
In general, our approach includes but not limited to the following:
1. Financial reviews When we represent buyers, we typically:
Validate Pro-forma EBITDA
Justify “add-backs” and/or non-recurring expenses
Assess the appropriate amount of “normal” working capital
Comments on value drivers and operating cash flows
Comments on net debt position/working capital
Challenging the reasonableness of forecasts and projections
Challenging the assumptions underlying the valuation of the business
Related party transactions/stand-alone costs
When we represent sellers, we typically:
Organize, maintain and provide due diligence materials to the buyer
Help negotiate business aspects of the definitive agreement
Provide an independent review of the overall value established for the business
2. Accounting reviews We inspect the target company’s historical financial statements and accounting policies and procedures. These reviews usually cover:
Accounting systems and records
Internal accounting procedures
Audited financial statements including cash, trade receivables and payables, property, plant and equipment, contingent liabilities, impairment of financial assets and non-financial assets, revenue and expense recognition.
Review of the auditors’ work papers
Tax liabilities and obligations
3. Business reviews We can investigate specific areas of concern about the target company’s industry and operations. These reviews provide an in-depth analysis of the target company’s:
Products and services
Sales and marketing
Information technology systems
Human resources issues
Our due diligence investigations often provide negotiating leverage to our clients, resulting in better pricing and/or terms and a better awareness of the challenges and issues, facing the organization.