Both acquisitions and divestments of companies and individual business areas involve risks and opportunities. Every transaction leads to far-reaching changes in the structure and culture of the organisations involved. That’s why it’s extremely important to analyse and evaluate the company that is being targeted for acquisition accurately. Creating transparency about all of the organisational structures and processes involved is a decisive factor in the long-term success of a transaction.
Important questions include: What are the potential deal-breakers? What potential value should be further analysed within the due diligence process and then implemented after the deal? How can buyers and sellers gather, review and analyse data from potential investors or candidates for a takeover or merger as early as possible – and make effective long-term decisions?
The Due Diligence team at PwC answers your questions and actively helps you with decision-making. We analyse your company’s business-related, legal and tax-related risks and opportunities and the target company’s financial risks and opportunities during M&A transactions. We do this by using the latest digital tools, established methods and comprehensive industry knowledge. This puts us in a position to visualise initial results quickly and provide information about the transaction target. Our clients benefit from the fact that we always use the most up-to-date analytical methods. We provide meaningful analysis that is specifically adapted to your unique situation and that helps you to effectively prepare for your transaction. We can also identify potential value and transaction-related risks as part of a comprehensive business due diligence process, in which several different disciplines work together.
We will help you drive growth and secure your future: We accompany you at every stage, and you can access our international network whenever necessary. Our clients know they can rely on us, which is why we’re now one of the world’s leading transaction consultancies. We believe your deal is our deal. Together, we get the right deal for you – even in times of great change.
Commercial due diligence is not only about checking the performance of a company in the past – it also systematically analyses the risks and opportunities that a given business model may face in the future. In this way, it provides an assessment of a company’s readiness for the future.
It involves a thorough analysis of a target company before an acquisition, taking into account perspectives from the market through to customers and competitors, and is always closely interconnected with other due diligence disciplines such as financial due diligence, operational due diligence, technology due diligence, legal due diligence and tax-related due diligence. The aim of commercial due diligence is to provide a qualitative and quantitative validation of the Unique Selling Point (USP) and business plan of a company that has been identified as a target for a transaction. This validation is based on a comprehensive analysis of the sustainability of the business model, the market environment, the customer behaviour and the company’s positioning within its current and future market environment. Commercial due diligence forms the foundation for decisions about whether to acquire a company or individual business area.
Our skills and experience cover sell-side and buy-side due diligence. We also have decades of experience in developing organic and inorganic growth strategies, market entry strategies, exit strategies and benchmarking exercises. Our commercial due diligence reports are aimed at financial investors (private equity) as well as companies and their management teams. Financing banks to a transaction also use these reports as evidence for their decision making. This means commercial due diligence plays a vitally important role in supporting the final decisions in making an acquisition or divestment.
Access to the right expert at the right time: Our international team works closely with our colleagues from the Strategy& team to provide our clients with deep and up-to-date industry expertise from across sectors – from the automotive industry through to building, construction, transport and logistics, business services, eCommerce, retail, consumer goods, industrial manufacturing, pharma and life sciences, as well as healthcare, travel, sports leisure, technology, media and telecommunications.
We accompany our clients throughout the entire transaction process and provide the relevant information to support decision-making for their specific transaction. We believe your deal is our deal. Together, we get the right deal for you – even in times of great change.
From acquisitions and mergers through to divestments: Thorough due diligence analysis is the foundation of every successful transaction. It aims to identify the financial risks and opportunities – and opens up a range of questions. What is driving the business? How can I find out more about the target company’s operational capacity and its supply chain? Is the business plan realistic? How has its working capital developed in the last few years? And which purchase price adjustments need to be considered?
The PwC team gives you the answers you need. Our financial due diligence covers detailed analysis on accounting and profit and loss, cash flow statements and key operational factors that play an important role in the purchase decision. By delivering analysis that is tailored to your specific situation, we can provide targeted answers to your questions and identify potential value, financial risks or possible deal-breakers at an early stage.
We can work together with you and your team to develop a due diligence plan that is customised to your needs – whether you are a buyer or seller. Our experts accompany you throughout the entire transaction, from process planning through to discussing the final reports with the buyer, seller and investors. Our portfolio for the sell-side includes vendor assistance with Factbook and vendor due diligence. For the buy-side, we support with red-flag reports, buy-side due diligence reports and closing accounts reviews. You can rely on our precise profit and loss calculations, working capital analyses, cash flow statements, and analyses of net debt and quality of earnings. We combine the results of our historical analysis with the results from commercial due diligence and operational due diligence to evaluate the strength of the business plan. Based on a systematic analysis of a company’s value drivers and the recommendations we develop from this analysis, our clients always have all of the information they need. That’s how we generate real added value.
You can also rely on us at further stages in the transaction process: We can show you the effects that the results of our detailed analyses will have on the purchase price negotiations and the Sale and Purchase Agreement (SPA). We also provide clarity about which aspects are most important for potential buyers – particularly for private equity investors or banks. We work closely together with our experts in tax due diligence and legal due diligence, and can access the entire global PwC network at any time. On top of this, we use the latest digital tools and place a strong emphasis on efficient data analysis. Our Data Analytics team is always available to support us by evaluating and visualising complex volumes of data in order to generate the most valuable insights possible. In this way, we make sure that your questions are answered quickly.
Financial due diligence is the cornerstone of the due diligence process: Our Financial Due Diligence team has decades of experience and deep industry expertise, and always takes a thorough approach to make sure we create a solid foundation for decision-making. After transactions have been completed, we support our clients with any questions they may have about post-merger integration. We’re your partner for every stage in the transaction process. We believe your deal is our deal. Together, we get the right deal for you – even in times of great change.
What do companies have to be aware of when analysing the accounting systems and process within the target company before an acquisition? Which changes to the accounting frameworks, systems and processes would be necessary after an acquisition? How will the target company’s processes and systems be integrated once the transaction is complete?
Our experts analyse the systems and processes of the target company on your behalf. We can show and explain any necessary changes and provide recommendations for how to make the integration process successful. Our team combines accounting and process expertise with decades of experience from a huge number of M&A projects.
Our clients benefit from our internationally recognised expertise, as well as our rapid analysis and reliable quality. This means they know, at an early stage, what effects the changes to systems or processes will generate. It’s our goal to give you a sense of planning security. We believe your deal is our deal. Together, we get the right deal for you – even in times of great change.
Identification of tax-related risks and opportunities is an important step during transaction projects. Potential buyers ask themselves a range of questions: Are there material tax-related risks associated with the company targeted for acquisition? Will the transaction trigger transfer taxes? What are the consequences for the transaction structure? Should the buyer take over individual assets or legal relationships from the target company (an asset deal) or purchase shares within a company (a share deal)? What impact do these factors have on the purchase price and purchase contract? During tax due diligence, these questions are examined and tax-related risks are identified. The resulting insights form the basis for an optimal tax structure for the transaction.
Tax due diligence evaluates the tax-related situation within the target company and provides insights for both buyers and sellers. By providing a comprehensive assessment of any relevant tax risks, effective due diligence makes it possible to reflect these risks at an early stage in the purchase price negotiations, the Sale and Purchase Agreement (SPA) and the transaction structure. Our team can develop an approach to tax due diligence that fits your specific situation. At the same time, we are in constant contact with our colleagues from other due diligence disciplines. Together, we can make sure that all available information is analysed and classified in a thorough and appropriate manner. Our interdisciplinary team of tax consultants, legal experts, auditors and transactions experts supports our clients at every stage in the transaction process – from the purchase decision through to purchase contract negotiations and integration.
Our Deals Tax team has the answers to all of your questions. From tax due diligence through to the purchase contract and tax structuring, we support companies and private equity investors throughout the entire transaction process. We can also access PwC’s international network of Deals Tax specialists at any time. As a PwC client, you benefit from our many decades of experience as a leading transaction consultancy. We believe your deal is our deal. Together, we get the right deal for you – even in times of great change.
Transaction contracts are often long and complex. That’s why it’s particularly important to understand exactly which legal risks are covered. The contract must be formulated in a way that takes all eventualities into account in order to provide both parties with the best possible protection against potential legal disputes. Buyers and sellers may ask themselves a wide range of questions: How can buyers and sellers make sure all relevant legal considerations have been taken into account? How can they assess the ownership situation, supplier contracts or social obligations of the company they’re targeting for acquisition? What is the new company structure going to be, particularly in terms of the various interconnections and overseas subsidiaries? How can they minimise their legal risks? These questions and many more are answered during legal due diligence.
During legal due diligence, we identify possible risks and disputes. We assess legal structures, commercial property rights and anti-trust law considerations, as well as further legally relevant information. Throughout the transaction process, we consistently review the results of our analysis to help our clients protect themselves against potential legal disputes at an early stage and make sure all agreements related to the transaction are handled strategically. We help our clients to select the right legal structure for their company and its subsidiaries. Our legal experts accompany you from the beginning of the contract negotiations through to the formation process. Our experts have deep legal expertise, comprehensive industry knowledge and operate quickly. We place a strong emphasis on the close communication with our clients. Whatever topic you’re dealing with, we believe in transparent and straightforward communication.
Whether you’re a buyer or a seller, we provide legal security. We support our clients with every aspect of legal due diligence, including partnership agreements, ownership structures or contracts with employees and suppliers. We work together with our colleagues from other Deals teams to offer support for every kind of due diligence, as well as providing holistic advice for the entire transaction process. We’re able to access our international network of lawyers and transactions experts at any time. You can rely on us to protect your interests. We believe your deal is our deal. Together, we help you achieve success with your transaction – even in times of great change.
Increasingly dynamic markets, technological transformation and complexity that is consistently rising in M&A transactions are factors that are generating a huge number of questions. Does the Purchasing team work and negotiate professionally? Will the staff and equipment have the capacity to meet the demands of the future? Is the supply chain making the products available reliably? Is there potential to optimise working capital? Are the R&D department and the Production department aligned effectively and managed efficiently? What is the business’s unique selling point? And how solid are the operational figures?
Buyers and sellers have to understand the risks and value drivers for their company’s business activities in detail. It’s particularly important to identify, quantify and prioritise value levers related to transactions. Operational due diligence plays a key role in this respect: It covers analysis and optimisation of production processes and shows development potential in areas including purchasing, production, logistics, sales and R&D.
As part of the due diligence process, the PwC team works together with clients to analyse their product and company performance, as well as the related success factors. We also assess whether potential synergies along the value chain have been evaluated in a realistic and comprehensive way. This assessment provides clients with an overview of the strengths and weaknesses within a company’s operational activities, and indicates their impact on the balance sheet. Our aim is to minimise risks, identify potential and take advantage of synergies. Together, we develop an approach based on our clients’ specific requirements – and in the level of detail they want. We provide all of the information they need to make a decision. This includes analysis and results in the form of quick scans, red-flag reports, operational due diligence reports and business transformation concepts. This information helps companies to assess the value of the target company, and also supports them in contract negotiations and when planning integration activities.
Operational due diligence is directly focused on risks and potential improvements within the various areas of a company. It makes sure that these risks and improvements have been evaluated in a realistic and comprehensive manner. Due diligence provides information about the existing strengths and weaknesses within operational areas of a company – and that’s why it has to be very detailed. In this way, we create the maximum level of transparency for the buyer and the seller. In addition, operational due diligence provides starting points for downstream measures. We also accompany our clients’ management teams in planning and implementing specific solutions for efficiency and value creation after the transaction has been completed. Our experts have many decades of experience in transactions and also have technical expertise, industry-specific knowledge and access to an international network. We support our clients in every phase of the transaction process, from evaluating business plans through to conducting expert interviews or visiting production locations. We place a strong emphasis on addressing every individual success factor. We believe your deal is our deal. Together, we help you achieve success with your transaction – even in times of great change.
Information Technology (IT) is now a value factor in and of itself. Increasing digitisation is making IT a key driver of sustainable business development. For almost all transactions, separating or integrating IT functions is one of the largest challenges companies face. As a result, detailed technology due diligence is now essential. There is often a lack of transparency about exactly how processes are supported by IT. Which systems are included in the IT landscape? Can the systems be integrated or are they now redundant? What are the key factors when it comes to an IT carve-out or IT integration? What are the costs and risks related to IT interfaces? Does the company have the necessary resources to successfully implement the business strategy – or the digitisation strategy?
In Phase 1, the PwC team creates a red-flag report within a short timeframe and identifies potential deal-breakers for you. We then conduct comprehensive technology due diligence – and in this, understanding the IT landscape plays an important role. For both buyers and sellers, this involves relevant IT solutions for your transaction, which covers applications, infrastructure, security, projects and finance. We identify and evaluate risks in the existing IT setup with a focus on current and future business requirements. We draw on our comprehensive experience to assess the costs and potential opportunities associated with a specific carve-out or integration project, and provide all of the information you need. We also support our clients in evaluating the IT capabilities of their target company in comparison to competitors. This analysis always emphasises understanding the value contributed by IT, in close cooperation with all other functions involved in the transaction.
Our experts support you throughout the entire transaction process. Our technology due diligence service gives you a reliable understanding of the IT landscape and the associated potential opportunities, risks and costs. Depending on the specific transaction, we view the area as a supporting function within a traditional structure or as a key element of value creation, and identify further special IT requirements. At every stage in the transaction process, we provide support from a technical perspective, from the strategy for IT and data through to the related implications for the transaction and its integration. We use our tested and proven methods and tools to help you integrate all IT-related considerations at an early stage, while also ensuring a high level of security for your transaction. We believe your deal is our deal. Together, we help you achieve success with your transaction – even in times of great change.
Partner, Transaction Services Leader, PwC Germany
Tel: +49 89 5790-5185