Transaction Advisory Services

Transaction Advisory Services (TAS) is our global name for due diligence and related services. It reflects our ability to provide solutions and constructive advice to our clients and the broad range of our offerings, from initial due diligence all the way through to post deal integration.
We present a brief description of the major types of transaction advisory services we offer:

Financial and tax due diligence

Financial and tax due diligence is our core type of service offered in terms of transaction advisory services. This involves a review of the past performance of the business and its future prospects in order to:

• identify maintainable earnings
• assess forecast assumptions by identifying issues that will affect future performance
• understand cash flows
• identify accounting and tax issues
• assess synergies and identify integration issues

A proper understanding of the target business, its operations, its market and its key business drivers is fundamental to a focused financial due diligence process. The financial due diligence process will identify issues for the buyer to consider in their deal negotiations so that appropriate actions can be taken such as:

• price adjustments
• alternative deal structures
• contractual terms such as warranties and indemnities
• amendments to funding arrangements
• action planning for the integration process

Vendor due diligence

Vendor due diligence can be used as a negotiating and/or stalling tactic in the disposals process and is typically used when a vendor has a good quality offering and is expecting lots of offers, but is not prepared to go exclusive with one potential purchaser too early in the process.

The principal benefits to a Company of undertaking vendor due diligence are:

• to reveal any significant issues at an early stage
• to reduce the time needed to complete the transaction
• to provide purchasers with greater certainty over the nature of the business, helping to speed up pricing decisions and views as to the potential level of gearing
• to help add credibility to the facts, figures and information provided in the information memorandum
• to give the vendor more control across the whole process. Interaction with potential buyers, funders and ultimate buyer:
• Copies of our report will be made available to potential investors, subject to them signing a release letter.
• We will meet with and answer questions from potential investors as necessary.
• If requested by the potential investor, with your permission we will undertake additional work as necessary to meet their comfort needs.
• Once the ultimate acquirer/investor has been identified and negotiations are complete, we will extend the addressees of our report and our duty of care to include the ultimate acquirer/investor and, if required, its funders

Deal support

This field covers a range of services to support the deal process, some of these services are also provided by M&A teams but the perspective of our TAS team has proven to be useful. Possible services include:

• management of the deal process (or aspects of it)
• support with deal negotiations
• assistance with deal structuring
• financial modelling
• advice on the content of the sale and purchase agreement (SPA)
• assistance with fund raising e.g. reviewing covenants, negotiating term letters

Commercial due diligence

The future profitability of any business is significantly affected by its market environment and commercial due diligence has become an essential part of the decision making process. It provides a major insight into the current standing and future prospects of the Company through comprehensive analysis and assessment of the commercial and market dynamics facing the business. This service will include business to business market research to interrogate the market and commercial dynamics affecting a proposed investment.

Operations due diligence

Operations due diligence provides an overview of the target business's operations and assesses its true and projected operational capabilities and cost base to determine if it can deliver its business plan. This will cover end-to-end business operations, from procurement through to manufacturing, logistics, management processes and commercial activities. The process may identify opportunities for operational improvement, quantify those opportunities and develop action plans to realise the benefits.

Management assessment

Management assessment aims to help clients in several situations:

Pre-investment - private equity and corporate clients often want to size up executives before they agree to proceed with an acquisition. Management due diligence offers in-depth and non-threatening assessments of key individuals to evaluate the risks of managerial capacity being insufficient to deliver an agreed business plan.

Post-investment - acquirers may wish to inform decisions about best allocating existing talent, or bringing in new talent, to point the best human capital at the challenges the business faces.

Performance improvement - alongside operational due diligence, advice on how to ensure that managerial resources are best deployed to assist the delivery of post-merger integration or cost-reduction programmes.

Vendor due diligence - during a vendor due diligence, an assessment of the management may flag any problems early in the process to ensure the vendor can take appropriate action to deal with potential concerns of buyers.

IT due diligence and advice

Financial and tax due diligence may include a review of management information systems but this may also be offered as a separate service. Highly-qualified and experienced experts are involved in any review of IT systems. In many cases an initial systems review may lead to additional work to advise on, and implement, recommendations.

Completion accounts

Completion accounts are used as the basis for determining net asset values, profits and the purchase consideration at or near the date of completion of a transaction. Completion accounts will normally be prepared by one of the parties to the sale and purchase agreement, and agreed upon procedures will be performed by their accountants and by the other party's accountants.
Our TAS team may have a number of roles in relation to completion accounts:

• identifying issues in the due diligence that need to be taken into account in the sale and purchase agreement section on completion accounts e.g. different accounting policies between the buyer's and the target business
• preparing completion accounts after the deal has concluded