Due Diligence Services

Expert commercial due diligence investigations for business purchases

Expert commercial due diligence services for business purchases

We conduct independent financial analysis and risk management reviews to prepare due diligence reports for shareholders, investors, business owners, boards and management to assist with decision making. Business acquisitions by their nature require significant financial due diligence. As a buyer, it is imperative to understand the nature of the business that you are buying, the obligations that you are assuming, and the risks inherent in the business. Our thorough investigations are particularly important when considering the acquisition of a private business. In such circumstances, the subject business has not been the subject of public scrutiny and markets, and there is limited ability for buyers to obtain corroborating information from public sources.

Our due diligence services are defined by a meticulous approach. We take great care in evaluating all aspects of a target company, from its financial health to its non-financial risk profile, to help you make informed decisions about your acquisition. We understand the importance of this check in the acquisition process, and we are committed to providing our clients with the insights they need to make informed decisions and achieve their business goals.

In the context of company acquisitions, an offer to purchase another company typically includes a proposed dollar amount. However, the validity of the acquisition hinges on the fulfilment of a due diligence clause. Essentially, this means that the purchase should only proceed if the due diligence process uncovers no issues or concerns regarding the target company’s financial or legal information.

Our independent due diligence services are commercial and practical in nature, and complement the advice provided by our clients’ legal and taxation advisors. We provide clear, no-nonsense advice regarding whether the proposed business purchase makes good commercial sense or not, and what price and terms will adequately address the risks inherent in the subject business.

Our due diligence services clearly communicates:

  • Whether a business purchase makes commercial sense or not
  • What risks exist in purchasing the business
  • How to complete the business purchase so that the risks are adequately managed and mitigated

Our experienced team consists of Chartered Accountants, Registered Business Valuers, and Registered Business Brokers. Most of our team have extensive experience at Big 4 accounting firms in disciplines such as auditing, taxation, and restructuring. This experience means that our financial and risk management advice has strong technical rigour.

Our unique, hands-on experience in undertaking business sales and acquisitions for clients means we have a deep understanding of the commercial drivers and risks associated with business purchases, and readily pass on our insights as a key component of our due diligence services.

Groves & Partners is highly regarded for our practical and clear risk management advice. Most of our due diligence service clients are referred to us by accountants, lawyers and other professional advisors.

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Our Due Diligence Process

Our due diligence services are defined by a practical and hands-on approach. As all business purchases are unique, our approach to each engagement is tailored in consideration of the unique nature, risk profile, and size of each deal we provide advice on.

Our typical process is outlined below:

1. Initial no-cost review

We commence with our due diligence services by reviewing information regarding the business and the transaction to the extent that this is available. In doing so, we will often review business documents. This includes information memorandums, financial statements, the subject business’ marketing collateral, and in some instances, draft share sale agreements or business sale contracts. This allows us to make an early determination of the nature of investigations we will need to undertake as part of our diligent review.

2. Confirm scope of engagement and advise professional fees

Following the conduct of our initial review, we will advise you of our view of major risks, and the areas of investigation requiring focus. In consideration of these matters, we will advise you of our professional fees to undertake a due diligence check, and the scope of our engagement.

3. Data and information request

We prepare a thorough due diligence checklist for submission to the business sellers. This due diligence service is typically tailored to enable our examination of all major risk factors we have identified.

4. Initial data and information review

We review the data and information provided in response to our due diligence checklist, conducting technical analysis, and considering commercial risks.

5. Management interviews and site visits

We conduct site visits and interview the business’ management to seek out clarity, ask queries, and further investigate business risks. Often, we issue further due diligence checklists to the business sellers to seek out additional information required.

6. Preparation and provision of a due diligence report

We will provide you with a report, which summarises our due diligence check and findings. The report will clearly advise the risks inherent in the business. It will also include steps that should be made to mitigate those risks as part of a transaction or through other means, advice on the appropriate price and terms for the transaction, our view on whether the business purchase makes commercial sense, and any limitations to our investigations. Furthermore, the report will include any outstanding matters requiring further action before proceeding with a transaction.

7. Meetings with you and your advisors

Our thorough approach is hands-on. Hence, we typically conduct regular meetings with you and your other professional advisors to provide time-sensitive advice regarding the nature of the business and the proposed transaction. In doing so, if it becomes clear to us at any stage of our due diligence services that the proposed business purchase does not make commercial sense, we always promptly issue you with such advice. This can limit your exposure to professional fees.

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Here are the most commonly asked questions in relation to our due diligence services. Feel free to contact us to ask your own questions or for us to elaborate on our answers below.

When should I commence undertaking due diligence on a business purchase?

Whilst circumstances can differ, in our view, formal due diligence investigations are best commenced immediately following initial discussions between a potential business buyer and business seller. This is in circumstances where it becomes clear that a transaction is afoot between the parties. Commencing earlier than this can cause business buyers to incur unnecessary spend on professional fees. And commencing later than this often leads to bad transaction outcomes.

How long does a typical due diligence process take?

The length of a due diligence service can vary depending on the complexity of the transaction, the industry involved, and the scope of the business review. In general, a thorough analysis can take anywhere from a few weeks to several months to complete.

Conducting an analysis for a small business acquisition typically requires a few weeks to complete, whereas a comprehensive evaluation for a significant acquisition involving a large corporate entity may take several months to finalise.

Other factors that can impact the length of the due diligence process include the availability of information and access to key personnel, the complexity of the financial statements, and the involvement of legal or regulatory authorities.

Ultimately, the duration of the examination will depend on the specific circumstances of the transaction, and the needs of the parties involved. It is important for us to work closely with our clients to establish a timeline, and ensure that the check is completed in a timely and efficient manner.

How does your team ensure confidentiality during the due diligence process?

Maintaining confidentiality is critical during the evaluation process to protect the sensitive information that is being shared between the parties involved. Here are some ways that we ensure confidentiality during the due diligence service:

  • Non-Disclosure Agreements (NDAs): We ask all parties involved to sign an NDA before sharing any confidential information. The NDA outlines the terms of the confidentiality agreement, and specifies the consequences of any breach of confidentiality.
  • Secure Data Rooms: A secure data room is an online platform that allows parties to share confidential information in a secure and controlled environment. We can use a secure data room to ensure that only authorised parties have access to the information.
  • Limited Access: We can limit access to confidential information to only those individuals who need to know. For example, we can restrict access to the data room to only those involved.
  • Encryption and Password Protection: All documents and files shared during the process can be encrypted and password-protected to prevent unauthorised access.
  • Track and Audit Access: We can track and audit all access to the data room, ensuring that any unauthorised access attempts are detected and dealt with promptly.

By taking these steps, Groves & Partners can help ensure that confidential information remains secure and protected during the due diligence service.

Will you project manage our business purchase?

Whilst we are very comfortable in providing risk management advice on a stand-alone basis, we do have significant experience in project managing entire business purchases for clients, and often do so. Many clients initially engage with us to undertake due diligence engagements for them. As the transaction progresses, they will request that we project manage some or all components of the transaction. This includes undertaking negotiations on their behalf, assisting them to instruct lawyers, and other important matters. We can provide this service for clients if they wish.

Will you tell me what the business value is and what price is suitable?

A key component of our financial due diligence is providing advice to you regarding the value of the business you are purchasing. Further to this, we commonly provide advice to clients as part of our due diligence services regarding how to best negotiate and structure the purchase price for the transaction. This includes the use of earn-out arrangements, and other deferred or contingent payment arrangements to manage the price, in consideration of the business’ risks.

What expertise is provided?

Your engagement will be managed by a senior member of the Groves & Partners team. We are a firm of experienced and professional advisors including Chartered Accountants, Registered Business Valuers, and Registered Business Brokers. Our team consists of experts with a diverse range of industry and service delivery experience, most of whom have previously worked with the world’s largest accounting and consulting firms, such as Deloitte, EY and PwC.

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