Due Diligence

RSM Belgium has extensive experience in carrying out buy-side due diligence and vendor due diligence.
 

What is a buy-side due diligence?
 

A buy-side due diligence is an analysis of the company to be acquired, conducted by the potential acquirer to identify and limit certain acquisition risks associated with the target company. The areas analyzed are generally the following:
 

• Review of the financial statements
• Review of the business plan
• Analysis of tax and social risks
• Analysis of legal and regulatory risks
• Analysis of the risks related to disputes and possible claims (current and / or potential)
• Checking the ownership of the assets
• Inventory of the guarantees
• ……  
   

What is a vendor due diligence?
 

A vendor due diligence is comparable to an (acquisition) due diligence. This is requested by the shareholders of the company to be transferred and is intended for potential buyers. The aim is to convince the latter quickly and to allow him to also place a bid in a short time frame. A vendor due diligence has several advantages and makes it possible:
 

• To draw attention to weaknesses/problems in an anticipative way and thus securing the transaction and maximizing the value of the company
• To speed up the acquisition process and keep it well under control
• To disrupt the internal organization as little as possible during the acquisition process.

A vendor due diligence gives shareholders the opportunity to communicate in a consistent and secure way financial information to various buyers and potential investors.

It usually covers the accounting and financial (upstream and downstream) aspects but also the tax, operational, commercial, strategic, pension and personnel aspects.

The different steps of a due diligence are:
 

• Defining the most important steps together with the client (client, management committee, board of directors, etc.) and the corresponding reports
• Determining the scope of the due diligence investigation
• Drafting a calendar
• Preparing and signing the engagement letter
• Executing the assignment
• Preparing the report
• Concluding (continuation or termination of the transaction, requesting additional information)
   

In addition, the framework for financial due diligence must also be established:
 

• Review of the most important financial documents (issues and difficulties)
• Review of the most important financial parameters and cash indicators
• General and financial organization
• Assessment of the quality and accuracy of financial data: cross check of financial information 
• Analysis of off-balance sheet obligations
• Critical analyzis of the business plan

Realizing an acquisition is a whole business in itself and involves a lot of risks.
 

An acquisition usually demands a major financial investment. The other risks are best kept to a minimum.
 

That is why it is essential to identify and manage risks and to prevent unpleasant surprises, price adjustments and disputes.
 

RSM Belgium helps you identify and assess the risks associated with the acquisition. This support can be provided, among other things, in the following domains:
 

• Due diligence 
• Specifically tailored  audit     

Successful negotiations are based on different aspects: be prepared, build the different steps of the negotiation in time and manage the exchange of information. To do this, the buyer needs to have sufficient key information. RSM Belgium supports you in identifying and collecting this information. Information such as the strengths and weaknesses of the company, the historical financial data, the growth potential, the risks, the business plans, etc. are essential for a successful negotiation.

The report will be tailored to your specific needs but usually covers the following aspects:
 

• Executive summary
• Financial statements
• Historical and current business results
• Net debt and cash flows
• Quality of financial data
• Quality of the results and the debt
• Identification of tax and VAT risks
• Identification of personnel-related risks
• Explanations   

You have just completed an acquisition and wish to continue to use further professional support. Then RSM Belgium can offer you various specialized services in these different domains:

• Audit & assurance
• Accounting services & expertise
• Taxation advice & consultancy
• Sustainability services
• Governance
• Internal Audit & Risk management
• IT advisory & risk insurance 
• Global employer services