Due diligence service
Contact our due diligence team
Financial due diligence
Financial due diligence is carried out to assist a prospective purchaser, investor or funder to make an informed judgment as to whether to proceed with a proposed transaction or not.
There are a number of purposes to the exercise:
- Identify potential deal breakers
- Challenge, question and test the information upon which a decision has been made
- Assist in the negotiation process via the disclosure of weaknesses or areas of risk
- Identify post completion issues
- Review net assets
- Highlight areas where additional warranties are required
Due diligence checklist
This checklist is not an exhaustive list of the due diligence process and should be taken as a guide only as to the areas which may be covered during due diligence.
Historical trading results
Accounting policies
Marketing strategy, pricing, competition and competitive advantage
Production and suppliers
Management and staff
Projected trading results and cash flow
Sensitivity analysis
Net assets
Key business weaknesses
Fieldwork - operational due diligence
Fieldwork is generally carried out at the target company’s premises. As part of the investigation it may also be necessary to review the company’s auditors files.
During the fieldwork, other risk areas may be identified that are not covered in the engagement letter. These would be discussed with the client immediately to determine if they require the scope of the assignment to be extended to include an investigation into these additional risks.
Due diligence report
A written report is presented to the investor and will usually be discussed at a suitable meeting. The report will highlight and give opinions on:
Any issues of such significance as to be potential deal breakers
Any issues that are not deal breakers but may indicate a need to renegotiate the price or the terms of the proposed investment
Any issues which will need to be considered post acquisition
The key to carrying out an effective due diligence investigation is designing terms of reference which focus on the key risk areas. In order to achieve this we undertake a comprehensive review of all of the information which the investor has used to arrive at their decision before discussing the scope of the assignment. Based on this review and further discussion with the investor we are able to define a terms of reference which covers the main concerns of the investor in an efficient and effective manner.
At Hawsons Corporate Finance we adopt a risk-based approach when we conduct due diligence services so that our work is directed to those areas that are considered to be potential risk. The output of our work is a focused report that addresses the issues that are relevant to the investor.
Meet our due diligence team
Meet our due diligence team
Looking for cyber due diligence?
Cyber security is now widely recognised as the number one risk to businesses. When it comes to mergers and acquisitions, this risk becomes even more critical. A single weakness can significantly affect business value, disrupt deal confidence, or lead to costly surprises after completion.
That’s why cyber due diligence is now an important aspect of the transaction process and needs to be discussed from the beginning. By identifying vulnerabilities early, you can reduce risk, avoid unnecessary post-transaction spend, and protect the value you’re buying or selling.
Therefore, we decided to invest in Bruce & Butler a respected data protection and cyber security firm based in Sheffield. Their expertise enables us to provide focused, practical cyber due diligence as part of our wider transaction advisory service.
