M&A Excellence

Find out your spreadsheets are not telling you!

Our Operational Due Diligence service offering provides an independent assessment of operational opportunities and risks that have an impact on management’s or interested parties’ decisions in situations of upcoming transactions.

Buy-side considerations:

• Pay the right price
• Avoid unpleasant surprises and unforeseen risks
• Understand what you are buying
• Address deal objectives
• Give comfort to investors

Performance considerations:

• Understand the operational competitiveness
• Identify opportunities and cost reduction potential
• Identify areas of operational efficiencies
• Evaluate strategic and operational plans
• Review proposed synergies and improvements

Operational Due Diligence Operations are the engine of a business. Operational Due Diligence (ODD) can give you insights into and comfort over operations in transactions. We help clients balance risk and opportunity in a transaction through identification of cost reductions and operational efficiencies, as well as operational upsides that may increase the value of the deal. We provide our clients with operational insights into transactions such as cost synergies, growth drivers and issues that could become deal-breakers. In addition, we support our clients in the identification of potential risk areas in which the client might not have the necessary industry experience. We also advise in assessing management‘s forecast from an operational perspective.

Focusing on the key issues Asking the right questions gives access to value areas and improvements, identifying operational risks and supporting the definition of mitigation strategies.

Marketing, sales, research & development:

• Do you have clarity on the effectiveness of the sales force and key account management?
• Are R&D programs aligned to customers and focused appropriately?
• What is the New Product Development (NPD) lead time?

Procurement, manufacturing, distribution, service provision:

• Are procurement costs under control?
• Have you identified initiatives to reduce costs?
• Are inventory levels excessively high to cope with inflexible, inefficient operating sites?
• Is the operational footprint appropriately sized?
• Can the number of operating sites be reduced?
• Are there any capacity issues?
• Are business assets underinvested?
• Does delivery performance meet customer expectations?
• Are services provided in an effective manner?

Finance, HR, administration, IT:

• Are back office functions appropriately sized for the volume of business?
• Is the business taking advantage of the latest IT developments to improve efficiency, quality of information and business control?

 

Client benefits:

• Reduction of transaction costs and internal time spent on transaction
• Increased capability for management to focus on “business as usual”
• Early identification of synergy realization opportunities and/or cost improvements
• Delivery of independent view on the target company to assist negotiations
• Due diligence reports are usually relied on by third parties providing financing for the transaction
• Unlocked opportunities within the target company can increase the value of the transaction and provide downside protection

Our industry-focused teams have extensive work experience from both industry and consultancies. We have worked on multiple projects in financial services, consumer products, pharmaceutical, Industrial Equipment & Components, Chemical, Aerospace and Defence. This experience, combined with our methodology, will help you execute your next transaction with confidence.

Management assumptions often lead to optimistic and misleading projections. Analyzing and evaluating gaps, risks and constraints brings an insightful yet objective view of the projections. Aligning the operational aspects with the business plan identifies where related performance improvement projects are required. The result of this review provides management with information to support the deal negotiation process.

Aligned with the review of management projections, operations have to be assessed in conjunction with the future strategy for growth and/or exit. Scenario planning helps to evaluate identified upside and downside factors. We assist in the identification and estimation of potential synergies based on an assessment of the buyer’s and the target’s operations and underlying cost structures.

The synergy analysis is based on the assumptions and drivers in each synergy area. A synergy case includes associated one-time and other restructuring costs as baseline for implementation. Along with our analysis and risk assessment, we develop synergy capture plans to help guide you through the implementation of synergies. The capture plans can include an implementation roadmap with clear milestones and activities, as well as a dashboard to help monitor and quantify progress against desired outcomes.