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Commercial Due Diligence

Commercial Due Diligence

A guide to reducing risk in acquisitions

Denzil Rankine

Jun 1999, Paperback, 160 pages
ISBN13: 9780273639718
ISBN10: 0273639714
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125.00

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Mergers and acquisitions are at an all time high, yet the evidence is that half of all acquisitions fail in one way or another. You can reduce the risks involved by applying commercial due diligence. An effective due diligence programme can help you negotiate better, prepare for integration, complement financial due diligence and aid effective valuation.

This briefing offers an in-depth, practical account of how commercial due diligence can help you minimise risk and avoid disaster. Extensive use of case studies, charts and checklists ensure that the report is a highly effective guide to the process, relevant to any industry and any scale of acquisition.

Contents include:

  • Preparation
  • In-house versus out-of-house
  • Published and non-published information sources
  • Case studies on market quantification and market trends
  • Conducting analysis
  • Reporting
  • Using the output
  • Vendor due diligence

Introduction

When is CDD needed?

  • At which stage of the acquisition process?
  • Is CDD needed at all?

Preparation and defining parameters

  • Defining your goal
  • The right level of detail
  • Staying objective
  • Relationship with financial due diligence
  • Managing your relationship with the seller

Published information sources

  • Using published information effectively
  • Finding the right information sources
  • The shortcomings of published information
  • Conclusion

Unpublished information sources

  • Role of unpublished information
  • Your own organisation as a source
  • Other organisations as a source
  • Who should gather this external information?

Piecing together the jigsaw

  • Filling the gaps
  • Commercial ratios
  • Combining sources

Market quantification – an example

  • Introduction
  • The UK market for competition rowing boats
  • Market trends – an example

Conducting analysis

  • What is analysis?
  • Working out what matters
  • Critical success factors
  • Analytical methods and tools
  • Making your own tools
  • Presentation of analysis

Reporting

  • Timetable
  • Methods and styles
  • The report
  • Reporting and the target

Using the output

  • The acquisition decision
  • Valuation
  • Negotiation
  • Preparing the integration plan

Examples of CDD outcomes

The right team and project management

  • Resources
  • Project teams
  • Internal systems
  • Using outsiders
  • Briefing and controlling outsiders
  • Danger signs

Vendor due diligence

  • What is vendor due diligence?
  • Advantages for the seller
  • How the buyer can find the true picture
  • Conclusion

Conclusion

  • Appendix: Case study – Playco