Due Diligence

Question 1

• Who are the main third party advisors normally used in diligence?

Answer 1

o Lawyers
o Accountants
o Strategy Consultants

Question 2

• What is the role of lawyers?

Answer 2

o Handle NDA/IOI/LOI review
o Review all legal documents provided by the seller
o Help negotiate definitive agreements and provide summary of issues (APA/SPA and Credit Agreement).

Question 3

• What is the role of accountants?

Answer 3

o Determine normalised EBITDA.
o Produce a quality of earnings report
o Tax structuring and optimisation

Question 4

• What is the role of Strategy Consultants?

Answer 4

o Focus on market and customer due diligence

o Understand competitor and industry dynamics

Question 5

• Why don’t PE engage 3rd party advisors before IOI (Non-binding offer)

Answer 5

o Very expensive

o The degree in which your advisor engages shows how serious you are

Question 6

• What is the purpose of management meetings from seller perspective?

Answer 6

o Convey the message they are a very good team and the company is a great business
o Give a deep feel of the business and answer questions

Question 7

• What is the purpose of management meetings from a buyer/PE Firm perspective?

Answer 7

o PE firm value add to grow business further
o Gauge management in person. Personalities
o Look for inconsistencies and red flags based on previous information