How will the company selected for acquisition develop in the coming years?
We offered our client – one of the leading companies in distribution of FMCG goods in Central and Eastern Europe – our consultancy services in the acquisition process of a company operating on the Polish market. We conducted a due diligence review of the company that our client intended to purchase. We advised them on the best investment decisions to take, how to protect themselves from risk, and what further steps should be taken.
During the due diligence we looked at two issues in particular. We checked whether the historically achieved EBITDA is likely to stay at a good level in the foreseeable future. We have also identified areas of potential business opportunities that may arise after acquiring the company.
Due diligence and consulting in the acquisition process
A team of consultants from PMR Consulting & Research delivered an exhaustive report, which discussed in detail the four key aspects of the analysis:
- Commercial due diligence. This part of the report included information on the current value, development potential and the level of market saturation. To complete the picture, we created scenarios for further development of the market together with the presentation of the consequences of each scenario – both for the acquired company, and the purchase transaction itself. This 360-degree analysis concerned competitive behaviour, growth prospects, key suppliers (manufacturers) and customers (retailers), market benchmarks in the area of distribution, aspects related to the reputation of the company, and also market forecasts.
- Operational due diligence. Operational aspects of the company’s activities were analysed using indicators of operational efficiency. We investigated the activity and performance of the company in areas such as sales, logistics, human capital, labour, debt collection policy or inventory management.
- Financial and tax due diligence. We verified historical financial results and tax reporting. To ensure maximum credibility of the analysis, we asked a company conducting financial audits to cooperate with PMR Consulting & Research in this area.
- Legal due diligence. The main purpose of the verification and evaluation of contracts with suppliers and customers was to identify any deviations from industry standards, off-balance sheet items, and areas of concern within the ownership structure.
Analysis of opportunities and threats complemented by expert recommendations
Of all the information and data about the market and the audited company that has been delivered to the client, a few should be mentioned. These are the following elements – key to achieving the desired return on investment:
- conclusions from the analysis of the cash flow of the acquired company,
- identification of new business opportunities and market openings for the purchaser,
- presentation of the risks and ways to counteract their negative effects.