Sometimes a moment comes, usually after certain period of company’s existence and strengthening its market position, when the owners may take a decision to sell it.
Success or failure of this idea to a large extent depends on the requested value, which in turn can be identified on the basis of so called “quality of company sold”. Here the company’s ability to generate enough cash flows for subsequent development or at least retention at the existing level is meant.
Initiative of diagnostics may come from the purchaser – potential investor or seller – business owner and sometimes from both parties at the same time.
In such case seller’s interest will be a possibility to identify previously unknown company’s reserves which may increase its attractiveness and value for potential purchaser. Moreover, in case of going through pre-investment assessment of business the seller has an opportunity to identify those risks beforehand, which the purchaser will be able to use in order to reduce the company’s value in future, and to eliminate them before starting the negotiations.
From the point of view of customer value and relevance of this service may be dictated by the desire to make sure that the seller shows him actual state of affairs of the company for sale without any hidden conditions and other “underwater rocks” which will lead to additional investments or lost incomes after the purchase.
Due Diligence procedures (pre-investment review) offered by our company are in their essence “shortcut” audit. At the sale / purchase stage there is rather little time for conduction of full-scale audit. That’s why our clients turn to the service of pre-investment assessment of business to detect the most essential issues in limited time period. Saving specialists’ time You also save money as well, as this service is much cheaper than the classic audit of company’s statements.
In the result of providing this service by specialists of our company the client will receive the list of the most significant already existing and / or potential risky areas (for example, not fully reflected receivables / payables, misrepresentation of financial result etc.).
Depending on time period allowed for our employees to provide this service such a review may last from two to ten days.
We start our work with the client from identifying his sphere of interest: overall review, review with inclination to financial or legal sphere and so on. Depending on this issue we set out the list of documents which should be provided to us by the client. We provide recommendations what, from our point of view, should be verified basing on the specificity of company’s activity. Such recommendations are based on our work experience earned with other clients from similar fields and with similar requirements.
The result of Due Diligence procedure is provided in the form of issued respective Report in which for every paragraph agreed in the beginning of work results of verifying this or that aspects are described. And in case of receiving negative results the information is presented which acted as a basis for our respective conclusions, potential consequences are described, presented suggestions for solution / adjustment / avoidance in future.