Commercial Due Diligence Reports

When requested by the client, Bridge Mergers & Acquisitions can provide commercial due diligence reports on acquisition targets. This can be a stand–alone service - the targets need not be ones introduced by Bridge.

The policy of most acquirers is to enter into a Heads of Agreement (“HoA”) with a target acquisition only if the commercial deal has been agreed and there is a full expectation of moving to a completion. This implies that most of the information which otherwise would only emerge from a due diligence investigation should already be known prior to the signing of the HoA.  To assist in this Bridge would prepare a pre-HoA report containing essential information on the target prior to legal and accounting due diligence and before the client had committed to any detailed offer to the sellers.

Objectives of the Reports

• To explain and describe the transaction for the benefit of other interested parties involved such as the major shareholders and funders.
• To identify issues, not otherwise raised, that should be discussed by the parties prior to the HoA.
• To identify “roadblocks” not previously seen,
• To reduce the cost of the accounting due diligence by identifying the most important issues.
• To reduce the cost of the legals by exploring the issues that need to be covered by warranties and indemnities, and, more importantly, those that do not.

The Reports would be designed to assist in the drafting of the HoA, to help to keep costs to a minimum, and, in some cases, to suggest at an early stage that a deal would not be forthcoming.

Contents of the Reports

• Profile of Target:
  • Review of Products/Marketing
  • Typical Customer profile
  • Position of Target in its market (basically, what drives the sales)
    • Competition
    • Impact of regulation
    • The niche it occupies
• Manufacturing/Operations
• Management structure
• Growth prospects
• Synergies between the client and Target
• Management’s future involvement
• Matters/questions arising from the financials
• Deal Profile
  • Valuation/analysis of comparative deals
  • Non- financial issues important to the sellers
  • Issues leading to higher legal or accounting costs