It’s not a secret that after a certain period of the company’s existence and strengthening of its position in the market, the owners can decide to sell the company. And for sure there will be someone who wants to buy this business – a potential investor.
Learn More ...
The success or failure of this effort depends on the requested cost. It, in turn, can be determined on the basis of the so-called “quality of the company”. This refers to the ability of an enterprise to generate cash flows sufficient for subsequent development or at least retention at an existing level.
The diagnostic initiative can come from either party (buyer or seller) or from both sides simultaneously. The seller’s interest in this case will consist in the opportunity to discover previously unknown reserves of the company, which can increase the attractiveness and value of the company for the potential buyer. In addition, the seller also has the opportunity to determine in advance the risks that may affect the future value of the company and become the subject of attempts to lower the cost from the buyer, in order to eliminate these factors before the discussion with the buyer of the sale price of the company.
From the point of view of the buyer, the value and demand for this service can be dictated by the desire to make sure that the seller shows him the state of affairs of the company without any hidden obligations and other “pitfalls” that, after purchase, will result in additional investments or inadequate income.
Due Diligence (pre-investment review), which offers our company, is actually a “truncated” audit. Since there is relatively little time left during the sale / purchase to complete a full audit, our customers turn to the service of pre-investment assessment of business, in order to discover the most significant aspects within a limited time frame. Another advantage of this service is that is cost lower that the classic audit of the company’s reporting.
Based on the result of this service by the specialists of our company, the client will receive a list of the most significant existing and / or potential risks (for example, undisclosed accounts receivable / payable, distortion of financial result, etc.).
Depending on the time allowed for our staff to conduct review procedures, it can last from two up to ten days.
Our work with the client begins with the definition of the scope of its interests: general overview, review with a focus on the financial or legal sphere, etc. Accordingly, the list of documents required from the client is to be determined. We give recommendations on what, in our opinion, are worth checking out, and based on the specifics of the company’s activities. Such recommendations are based on our experience working with clients from similar spheres with similar requirements.
The result of the Due Diligence procedure is the corresponding Report, in which for each item agreed at the beginning of the work, the results of the verification of various aspects are described (in case of negative results, information on the basis of which we draw such conclusions, potential consequences, solutions / correction / preventions in the future).