Whether you are acquiring, divesting, refinancing or raising fresh funds, you will need a team of experienced, pragmatic, value-focused advisors to support your transaction. Our Transaction Advisory team will work with you and your team to identify and address key business issues, particularly those that are likely to affect the value of the business, the purchase price or the negotiation of sale and purchase agreements.
Our Transaction Advisory Services has been developed to address the key requirements during the transaction process.
In the execution of any deal, preparation is key. Whether as vendor, or acquirer, resources can be constrained - be that time or people. Our Deals team recognise that providing support at all stages of the deal process, can help to manage expectations, ease pressure, bring fresh thinking and ultimately accelerate a transaction.
Our support includes:
- Market review and Target Identification
- Bid process management
- Exit readiness / preparation for sale: pre-sale identification of operational improvements to enhance value
- Data room review
- Initial valuation and Purchase Price Allocation
- Vendor Due Diligence Review and ‘Top Up’ Due Diligence
- Heads of Terms – advice on deal terms and negotiation
- Buy-side due diligence
- Completion mechanism and SPA advisory
- Completion accounts / Locked box preparation and review
- Debt advisory, including introductions to potential funders
- Synergy Review
- Financial modelling
- Carve out and integration planning and implementation
- Transitional Service Arrangements – advice on terms and negotiation
- Resourcing / Secondment of experienced finance staff
Performing due diligence is much more than packaging raw data. If you are selling your business or buying a business, it helps you to mitigate third party risk, be it commercial, legal, regulatory or reputational, as well as protecting deal value. It enhances your ability to identify, plan, negotiate and execute strategic undertakings.
Separate to the process of financial, tax and legal due diligence is an opportunity to undertake enhanced due diligence in specific areas of a business. Enhanced due diligence provides a more in-depth, focused analysis that may have an impact on the decision making process or financial components of a transaction. These functional insights range from operational and people issues, to technology and cyber and often inform post-transaction operational and investment decisions.
Financial Due Diligence focuses on value drivers and business considerations that are of critical importance to potential buyers, not just on the target’s balance sheet.
Areas such as quality of earnings, normalised working capital, cash- and debt-like items and the impact of accounting policy changes are key deal issues which need to be fully understood in assessing the viability of any transaction.
Whether buy-side or sell-side, the fundamental principles and scope of financial due diligence remain broadly similar.
Vendor due diligence is commissioned by the vendor and allows for a balanced and independent report, recognising the vendor's desire to control the process and protect shareholder value. This is balanced by the requirement for a robust and independent report to be used by the purchaser and their funders, who will ultimately be provided with a duty of care. The story of the target's evolution, historical trading and forecasts can be articulated in a way which is supported by the financial analysis and which links into the messaging in the Information Memorandum and other transaction documents.
Separate to the traditional financial due diligence reporting, we can also provide Acquirer or Vendor Assist packs – effectively the production of the diligence databooks, rather than full reporting.
Our flexible approach results in customised deliverables based on your needs. We provide pragmatic and commercial insights and opinions and our reports focus on the main issues but are still comprehensive enough to provide you with a deep understanding of the business.
In any corporate transaction, it is imperative that the tax consequences of such transaction be evaluated. Tax risks identified as part of a due diligence process can have a significant impact on the value achieved for an entity, and understanding these risks fully is an important element in the process of assessing the transaction from the perspectives of rationale, structure and price.
Our tax team provides both buy-side and sell-side tax due diligence services to identify tax risks and to provide recommendations for resolution or mitigation of same during the M&A process. This includes:
- Identifying and quantifying business/company historical tax risks across the major tax heads including Corporation Tax, Payroll Taxes, Value Added Tax and Relevant Contracts Tax;
- Assessing unutilised tax opportunities;
- Understanding the impact of tax risks and opportunities on the transaction and its price;
- Making recommendations on appropriate remediation or mitigation measures;
- Assessing the requirement for specific tax warranties and/or indemnities which may be required as part of the Share Purchase Agreement and/or Deed of Warranty; and
- Advising on appropriate transaction structure post sale /acquisition.
Our tax team are an all-Ireland practice and can advise on transactions across both Ireland and the UK. We also work closely with our colleagues across the Grant Thornton International network to collaborate on international transactions and provide holistic tax reporting and tax advice.
Mergers and acquisitions represent unique opportunities for game-changing business transformation – but IT’s role is critical. In our experience, up to one third of total integration efforts relate to IT, and more than half of all synergistic integration activities are critically dependent on IT. Effective due diligence is all about asking the right questions and at Grant Thornton we specialise in knowing how to get to the answers quickly. We address the entire operating model:
- Business and IT strategy (incl. IT governance and policies, IT financials, IT service and performance management);
- Business capabilities and supporting systems (incl. IT application and infrastructure);
- IT assets (incl. office locations, tangible and intangible technology assets as well IT vendor relationships);
- IT people and skills (incl. labour arbitration, contractual and working culture aspects);
- Data (incl. data quality, data access and regulatory compliance); and
- Risks (incl. IT security, disaster recovery, data privacy and backup).
This holistic approach provides the basis for realistic, synergy-driven business and IT integration planning.
The way a company handles environmental, social and governance (ESG) issues can affect its long-term performance and valuation and in today's M&A market, ESG Due Diligence is imperative. In a recent global survey of private equity general partners, 54% had reduced their bid price after ESG Due Diligence. A complete view of all relevant ESG risks and opportunities within a target company is critical in order to negotiate the right price and the right terms for a deal. At Grant Thornton we can assess:
- material ESG risks, liabilities and opportunities;
- ESG policies, procedures and performance;
- emerging social and environmental trends and how they are likely to affect a company and its market; and
- the impact current national and international ESG regulations have on a company.
When you buy an organisation, you often buy its people, which can be one of the most important assets in the acquisition.
As part of the People Due Diligence, it is important to understand how organisational structure, accountabilities, governance, culture and employee behaviours, along with the right people, processes and technology, all work together to support the strategic priorities of the acquisition.
Either in preparation for a deal or throughout the acquisition process, key elements of the People Due Diligence will include gathering and analysing appropriate target-side people data in order to quantify people related risks, opportunities and costs in order to inform deal negotiation.
We provide advice on statutory obligations in respect of staff consultation, TUPE transfer processes and post-acquisition staff integration in order to ensure a positive and engaging employee experience.
Global and local economic contexts change rapidly, impacting the viability of a purchase decision. Key questions that should be considered in an enhanced due diligence process include:
- What are the major consumer, economic, political or environmental trends that will influence your market?;
- What are your peers and competitors doing?;
- Where are the market ‘hot spots’?; and
- Which options offer the best economic return?
Key elements of the Economics Due Diligence will include gathering and interpreting market insights, performing a ‘horizon scan’ to assess the emerging trends that will impact on future performance, and assessing options through our Multi-Criteria Assessment toolkit. Our team assesses the target opportunity through five cases – strategic, economic, financial, managerial and commercial – to provide you with a holistic view.
When you acquire a company, you are taking on pre-existing operational processes that are in place. Whether you are seeking to merge the company within your existing operations or operate as a standalone entity, you need to ensure that operations are optimised, efficient and scalable in order to maximise the return on your investment.
Grant Thornton can provide assurance that the targeted operations are robust and fit for purpose, either pre-sale or during the acquisition process, with comprehensive post-implementation plans to maximise synergies and operational value creation.
We have a breadth of experience and focus
sed methodologies to conduct reviews of operational infrastructure and processes, create optimised target operating models to support post-integration plans and maximise the efficiencies to be garnered from a merger or acquisition.
It is critical as part of transaction preparedness that the full breath of Governance, Risk & Compliance (GRC) matters that relate to a business are considered and that same have been critically assessed against best practice. An effective GRC Due Diligence can identify issues and suitable remediation early on.
Typical areas that fall into scope for review include, but are not limited to:
- board structures;
- risk management and internal control frameworks;
- strategic risk;
- treasury risk;
- third party risk management; and
- people risk - skills, experience, succession, IT risk and compliance/regulatory risk.
When you buy a company, you buy its data; and more often than not you take responsibility for its data security – past, present and future. That can mean inheriting its cyber security failings, which can have a significant impact on its value.
When Verizon acquired Yahoo! in 2017, a previously undetected cyber-attack reduced the price paid by $350 million. The onus is now on an acquiring business to ensure that the value of the data they are taking ownership of is protected. From private equity firms with portfolios of potentially vulnerable acquisitions, to high-growth start-ups looking for a buyer, Cyber Due Diligence can no longer be ignored.
Grant Thornton can assess the governance and controls that an organisation uses to keep its data safe. This enables the identification of key cyber security risks and vulnerabilities in a target entity. It should bring to light any previous breaches that the target firm may have suffered, allowing the evaluation of the likely costs of a past or potential breach. It will reduce the risk of future breaches and liabilities, helping to avoid fines, litigation, brand damage, and loss of customers.
Enterprise Value (EV) is the value paid for the business (usually based on a multiple of earnings or revenue or discounted cash flow) on a ‘cash-free, debt-free’ basis, with a ‘normal level of working capital’.
These concepts form part of the ‘EV to Equity Value Bridge’ and have the potential to significantly increase or decrease the headline price paid for a business.
The role of the price adjustment mechanism in the context of the wider Sale and Purchase Agreement is becoming increasingly important, with the need to preserve value and avoid, or mitigate, disputes through the negotiation and execution of these areas.
In conjunction with appointed legal advisors, Grant Thornton can assist acquirers and vendors through:
- analysis and negotiation of cash- and debt-like items and normalised working capital adjustments in the EV to Equity Value Bridge;
- providing input into the Locked Box completion mechanics for the SPA;
- providing input into the Completion Accounts closing mechanics for the SPA;
- providing input into protective covenants, including warranties and indemnities and related disclosures; and
- preparing and reviewing Completion Accounts post transaction.
Why Grant Thornton
We work to develop a real understanding of our clients’ businesses and requirements, with partner-led service and long-term working relationships. We also offer cross-border transaction experience. Working with transaction advisory teams in other countries via our international network, enables seamless delivery of cross border opportunities.
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