A prospective investor is concerned about the target’s:
1. Quality of earnings
2. Adequacy of working capital
3. Unrecorded or contingent liabilities.
We call upon due diligence to analyze these areas and, in a broader context, to understand the business of a company, its risks, and prospects. These objectives define the scope of due diligence and bring forward a range of tools, methods, and techniques to perform the analysis.
The attached bundle includes forms and templates which I have developed during my years in buy-side private equity and investment advisory. Many of them are quite cross-functional and can be used in regular reviews of business performance. They will serve as transaction price adjustments, areas for further investigation, or a negotiation piece in your discussions with sellers.
A few highlights to mention:
– sales summary, portfolio statistics, product performance
– sales seasonality
– price-volume-mix effect
– customer concentration
– staff analysis (cost split, turnover, and retention)
– fixed assets and CAPEX
– complex financial statement analysis (DuPont, sources, and uses of liquidity, cash conversion cycle)
– challenging management forecasts, evaluating the accuracy of previous budgets
As such, you will find it useful if you are:
– considering a target for potential acquisition
– assisting your client with a potential M&A transaction
– analyzing the performance of a company you work for
– trying to understand your business better
– learning how to carry out due diligence
The Excel file is accompanied by a detailed text guide. Feel free to reach out if you have any questions about any of my products.