Vendor due diligence
We conduct financial, tax, commercial, operational and IT vendor due diligence to help identify transaction value drivers, improve deal structures and mitigate risks for a wide variety of stakeholders in the process (sellers, buyers and funding banks). We also help challenge assumptions about future performance so you can choose the right valuation and take up the right reps and warranties.
What EY can do for you
We conduct diligence in the following areas to help you answer questions about the value drivers of your deal.
- What is the strategic rationale for this deal and what makes this target attractive?
- What incremental markets, customers or sales channels will be created or accessed by this acquisition?
- How does this transaction enhance the brand or market position?
- Do historical reported results accurately reﬂect run-rate proﬁtability? Do you have the right data to support your forecast?
- What is the appropriate adjusted EBITDA and Net Financial Debt for valuation purposes?
- How is Working Capital affected by seasonality and what are the funding requirements?
- What factors, if any, will affect the purchase price?
- What balance sheet and off–balance sheet exposures concern us most?
- How could accounting principles applied materially affect reported results or disclosures after closing?
- How do we plan and prepare for Day One to minimize business disruption and enable IT connectivity between buyer and the target?
- How can we leverage the deal as a catalyst for IT transformation?
- How can we assess existing IT capabilities for access to new markets and operational improvements?
- What is the source of synergies and how are they quantified?
- What are the key Day One and post–Day One operating risks and priorities?
- What synergies are available (revenue, cost, tax, balance sheet, etc.)?
- Are appropriate plans in place to implement and capture synergies?
- Is the purchase consideration complicated?
- Is the decision supported by an outside opinion of value?
- Are the impacts of opening balance sheet valuation adjustments clearly understood?
- Will tax structuring require a thoughtful understanding of value to achieve maximum efficiency?
- Do we have a tax-efficient structure to deliver the commercial objectives and investment basis of the transaction?
- Did you consider upfront clearance with the ruling authorities to address certain tax consequences and provide certainty for you and the potential buyer?
- Did you consider potential indirect tax aspects and transfer taxes applicable to a carve out transaction or asset sale?
- Is it possible to apply a specific procedure to mitigate inheritance of pre deal tax liabilities?
- Have we considered the tax implications as digital technology changes business strategies, models and supply chains?
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