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Due Diligence

At American Appraisal, we believe that effective due diligence depends on identifying and managing significant transaction issues, anticipating and identifying potentially important risk and negotiation issues. Our approach saves you time, money and effort and helps influence the price at the outset of the deal.

Financial and Accounting Due Diligence
Due diligence is the process by which we assess all the relevant financial factors thoroughly in advance of a transaction. As such, this exercise spans all relevant aspects of the past, present and future of the business of the target company. Due diligence can be helpful in:

  1. Gaining an understanding of the business and operations of the target company
  2. Identifying critical success factors to facilitate informed decisions of acquisition, as well as defects and key issues faced by the target
  3. Gaining information that will be useful in valuing assets, defining representations and warranties and/or negotiating price concessions
  4. Understanding the key financial and commercial risks involved and ensuring that the transaction complies with the requirements of the investment or the acquisition

Our practice offers financial due diligence and related services to help clients assess the potential value and risks associated with a transaction, plan and manage acquisitions and mergers, and raise debt and equity. Our team helps clients maximize value and minimize risk during the acquisition process.

We focus on bettering your negotiating power to help make your transaction a success with minimal roadblocks. We aim to provide timely professional assistance that fits the needs of your business.

Our services include:

  • Pre-deal evaluations: This is the initial review assessment to identify the key risk considerations and potential deal-breakers in the transaction. It is critical to devote sufficient efforts to pre-deal structuring and valuation. It involves detailed analysis of the business model and evaluation of the business plan, business strategy, study of industry growth drivers, presence of the company in various verticals and estimating value by different methods. This helps in saving time and cost in otherwise pursuing a deal which might not meet the company’s parameters.
  • Post-acquisition transaction support: Once the deal is completed, an array of new challenges confronts companies through the business cycle. This service involves reviewing the internal control and governance environment. It also deals with developing or improving policies and processes to ensure that the company is successful in achieving its objectives.
  • Financial due diligence: This is a reasonable enquiry into the financial aspects having a material impact on the prospects of a business. This is a review of the historical performance but will also consider current financial data and forecast financial performance, which helps prospective investors in making informed investment decisions. The key findings of this review process will have a bearing on the transaction pricing.
  • Commercial due diligence: This is a service for potential acquirers of businesses providing a thorough assessment of a target’s positioning within its commercial environment. This exercise helps acquirers to understand the various risks involved in a business acquisition, determine the right valuation, quantify the target company’s growth potential and overall attractiveness, and plan for the post-deal period when important strategic decisions need to be made and implemented quickly.
  • Vendor support: In a volatile market scenario, companies often consider disinvestments. This service helps a company in identifying and resolving issues and facing challenges in the process of disposal. It includes pre-sale reviews, grooming of businesses prior to disposal and evaluation of various options of disposal.
  • Vendor due diligence: An independent evaluation and analysis of the financial performance of a business to assist vendors in making informed decisions, prepared at the initial stages of the disposal process.

Technical Due Diligence
Technical due diligence is the process of systematic review, analysis and discovery in which a prospective purchaser, occupier or financier of property gathers  information about the physical characteristics of the property in order to make an informed assessment of the risks associated with the transaction. It is important to identify defects or deficiencies of the assets that could impact on their short, medium, or long term performance.  The defects may include the need for repairs arising from a lack of planned preventative maintenance, neglect or misuse, insufficient capacity, etc.

The benefits of technical due diligence include:

(a) Gaining an understanding of the condition and design of the PP&E,

(b) Establishing the suitability of the PP&E for its intended use,

(c) Understanding the need for future repair and maintenance and quantifying associated costs and other liabilities,

(d) Providing a level of comfort for institutional investors, and

(e) Providing a foundation for price negotiations and allocation of risk.

In the assessment, we consider the following criteria:

  • Quality
  • Capacity
  • Technical defects
  • Average operating and capital expenditures