Diligence

Clients rely on our commercial due diligence experts to help them assess, identify and define opportunities to capture revenue, new customers and new businesses. We provide market and company assessments, including customer interviews and assessments; market size evaluations; market share growth assessment and strategy; demand modeling; M&A, antitrust and competition assessments; competitor assessment and assessment of KPIs; value proposition and brand perception assessment; and strategic partnership evaluations.

Whether you’re on the buy- or sell-side of a transaction, our financial due diligence services include quality of earnings assessment, determination of working capital requirements, net asset analysis, sales/margin analysis, short-term forecast analysis, synergy analysis and carve-out considerations. Clients rely on our deep industry expertise to ensure they get approval to move forward with a deal, or determine that the transaction risk is too great.

• Buy-side financial diligence: Our buy-side clients rely on our capabilities across the entire life cycle of a merger, acquisition or other transaction. We help buyers assess historical performance of the organizations to be acquired, predict projected performance, review working capital trends, assess balance sheet exposure, provide insight into financial and business risks associated with the proposed transaction, identify integration challenges, and negotiate the purchase.
• Sell-side financial diligence: On the sell-side of a business sale, divestiture or carve-out, our clients rely on us to help them anticipate all potential issues and questions that might be raised by buyers and their advisors. As we do on the buy-side, we help sellers assess historical performance, predict projected performance, review working capital trends and assess balance sheet exposure, identify separation challenges and assist with sale negotiations.

HR, compensation and benefits due diligence includes analysis of health and welfare plans, pensions and post-retirement medical plans, compensation and equity plans, employment agreements (e.g., change in control, retention, etc.) and other core responsibilities of HR organizations. We focus on the financial and operational aspects of HR, compensation and benefits in M&A.

We help clients answer questions such as:

• What existing people issues should be known before you purchase a business?
• What existing financial exposures within the compensation and benefit (C&B) programs should be factored into your bid?
• How much will it cost to run the HR function effectively on a standalone basis?
• How do the target’s C&B plans compare to market, and upon alignment to your programs, will it be a cost increase or decrease?
• What savings levers are available within the HR function and benefits that you may be able to pull post-close?

Our benefits and HR due diligence services include:

• Benefit plans assessment (including pensions)
• Compensation and equity plans assessment
• Employment and change-in-control agreements
• Collective bargaining and works councils
• HR synergy analysis (EBITDA impact)
• HR standalone costs (carve-outs)
• Severance and RIF modelling
• Purchase agreement review

When acquiring or selling a company, you need to know if the IT infrastructure can deliver on the company’s business plan. We’re experienced in performing comprehensive technology and cybersecurity assessments to evaluate the overall IT infrastructure and application landscape in addition to cybersecurity risks or opportunities. Clients involved in transactions rely on us to identify and report current state IT strengths, weaknesses and threats, as well as future state opportunities and requirements to reduce IT risks and costs, improve and modernize capability and service delivery, and add enterprise value.

When you’re looking to complete a transaction, we help you assess:

• IT organization gaps, opportunities and governance
• IT infrastructure scalability, reliability, monitoring, licensing, investment opportunities and outsourcing
• IT spend, including performing industry benchmarking and identifying opportunities for vendor rationalization
• Security and privacy, including cybersecurity, incident management, PCI, HIPPA, GPDR, wireless and proactive
• Applications, including quote-to-cash, ERP, COTS, Bespoke, modernization and CI/CD
• Strategy on how to move forward with merger integration, carve-out, modernization, and/or transformation

Our tax due diligence experts review pre-closing tax profile and tax return filings to identify and assess historic tax risks in international, U.S. federal, state and local tax matters. Clients rely on us to effectively advise them on tax-efficient structuring for acquisitions and operations of targeted businesses.

Issues we help you with include:

• When you need practical proactive tax guidance on issues that impact your daily business and finance operations
• When you need to articulate clearly the most tax efficient structuring options
• When you need to see the big picture, and require comprehensive tax advice to address the life cycle of the transaction
• When you need practical, proactive tax advisement to help you understand the important changes in tax law that impact your business in a timely manner

Our tax diligence services include:

• Buy-side and sell-side tax diligence
• Tax structuring and tax planning
• Tax modeling and effective tax rate analysis
• Tax controversy representation and audit support
• State and local tax advisory services
• Global transfer pricing services
• Tax planning for global treasury operations
• International tax planning analysis of global tax treaties

For transactions to be successful, whether you’re on the buy- or sell-side, it’s imperative to know if the company’s operations are appropriately structured to deliver on its business plan. Our operational due diligence (ODD) practitioners are well versed in qualitative and quantitative assessment of operational requirements, risks, opportunities and red flags.

We help clients understand and preempt potential operational issues that could arise from transactions, such as:

• Deal value estimates not being achieved
• Costs to achieve, or capital and resource investment required being significantly higher than expected
• Anticipated synergy targets missed or revenue/cost levers that need to be accelerated
• Missing key TSA and PA requirements, and needing to renegotiate
• Determining appropriate valuation for the target

Our ODD service offerings are customized based on specific buy-side or sell-side use cases. Buy-side ODD use cases include merger-integration of WholeCo, or acquisition of a carved-out portion of the target company that may be merged or left as a stand-alone entity. Our buy-side services include:

• Red flag assessment consisting of a high-level review of critical risks/areas of opportunity associated with the purchase to validate go/no-go rationale
• Synergies assessment to identify, quantify and prioritize (by time and complexity) revenue and cost synergies to unlock deal value and affirm strategic rationale for investment
• Integration readiness assessment through an evaluation of the target’s operating model and fit/maturity with the buy-side, along with any potential risks/complexity posed from change of control/ownership (licensing, regulatory, legal entity, operating approvals)
• Stand-alone costs assessment to review and validate any one-time and recurring costs that need to be appropriately accounted for carved out entity
• Transitional service agreement review to evaluate adequacy of transition support requirements, timeline and costs for carved out entity
• Purchase agreement review and support, including valuation, negotiations and meeting preparation

For sell-side ODD, common use cases include carve-out or WholeCo sale readiness. Our sell-side services include:

• Divestment strategy assessment to affirm strategic rationale, including deal perimeter, for carveout/sale by maximizing transaction value while minimizing one-time costs
• Separation readiness assessment to review and evaluate critical operating model components that need to be considered along with potential risks/complexity and approach for disentanglement
• Transitional service agreement design and pricing for critical support services to be offered to carved out entity
• Stand-alone costs assessment to uncover and evaluate any one-time and recurring costs that need to be appropriately accounted for separating and standing up carved out entity
• Stranded costs assessment to identify a potential disproportionate cost structure relative to the seller’s new size, e.g. excess HC and IT licensing costs on applications no longer needed for RemainCo
• Sale agreement review and support, including valuation, negotiations and meeting preparation