Financial Due Diligence
Under financial due diligence, we help the potential acquiring company to access the financial position of the target company before the acquisition takes place. We undertake the following responsibilities:
- Assess the valuation adjustments like EBITDA analysis and net debt
- Identify and analyze revenue and cost trends
- Evaluate historical financial performance
- Understand key business drivers
- Analyse the quality of earnings, cash flows and margins
- Identify any additional requirement for investment in capital expenditure or infusion of funds to manage working capital
- Identify any off-balance sheet liabilities, commitments and onerous contracts that are not disclosed in the books of accounts
- Identify representations and warranties for inclusion in the SPA
Tax Due Diligence
Under tax due diligence, we address various tax-related challenges encountered during the Mergers & Acquisitions deals. Since the tax laws keep changing, they are highly complex and can adversely affect a deal. We advise our clients on General Anti Avoidance Regulations, indirect transfer of assets, restricted debt push-down options and interest deductions. We undertake the following responsibilities:
- Assess the current tax position, status of tax audit and legal structure of the target
- Identify any historical tax exposures like interest and past penalties, the status of pending tax litigations, etc.
- Analyse the impact on tax due to change in control
- Identify any tax benefits which can be availed by the client
- Ascertain the quantum of funds locked in current assets like deposits with various tax authorities, tax refunds due from the tax authorities, etc.
Commercial Due Diligence
We carry out commercial due diligence on the shortlisted potential targets in order to assess the sustainability of target’s business model with its external environment which includes competition, market, trends, margins, forecasts, etc. We carry out a comprehensive review of the target’s business plan in lieu of the projected market conditions, industry and competition. We undertake the following responsibilities:
- Conduct detailed review and analysis of the target company’s business plan and strategy
- Examine target company’s growth plans and recognise their unrealised growth potential
- Address any potential market risks in the target’s valuation
- Conduct competition analysis to identify how the market or competitive uncertainty will impact the value of a target company
- Review and assess the forecasts and budgets of the target company against market trends
- Assess the market size and segmentation
- Indicate potential business risks and possible mitigation measures
Regulatory Due Diligence
Under regulatory due diligence, we review the adherence and compliances to various laws, legislations, regulations, enactments and commercial obligations by the target company. It includes adherence to company law, SEBI laws, Foreign Exchange Management Act (FEMA), Foreign Direct Investment (FDI) policy, Employment and Industrial laws, Intellectual Property Right (IPR) laws, Environmental, health and safety laws, etc. We undertake the following responsibilities:
- Identifying the probable exposure on account of non-compliances to regulatory laws
- Review company organization and reporting structure
- Review annual reports, statutory registers, annual filings, etc.
- Review complaint log and complaint handling measures
- Determine if there are any past, present or pending litigations
- Review any outstanding contracts or disputes
- Identify and resolve any conflict of interests
HR Due Diligence
We identify potential human resource opportunities and challenges faced during Mergers & Acquisitions transaction. It involves identifying HR issues, workforce events, synergies between both the workforces, key implementation concerns, benefits to be provided to employees, etc. We undertake the following responsibilities:
- Determine employment cost of the prospective business
- Identify human resource management risks and issues that affect the cost
- Identify key positions and manage talent retentions
- Ascertain organisational leadership models and structure
- Design new human resource policies
- Review contractual terms and conditions
- Establish a communication plan for effective change management
- Communicate strategy and merger principles and values
- Integrating Human resource management policies, processes, organisational culture and human resources information systems
- Review all collective bargaining agreements and labour management memorandum
Environmental Due Diligence
Under Environmental due diligence, the assessment of target company is done to determine the potential threats of its operations on the environment. Environmental due diligence helps in evaluating the projects that possess a risk to the environment. We undertake the following responsibilities:
- Assess the activities ofthe target company against environmental compliances. It further involves going through the related documents and reviewing the corporate system
- Visiting the company and conducting a physical inspection of the site to discover environmental related issues
- Preparing a report that states the environmental risks along with the rectification steps
