Due Diligence

Overview

The purpose of this Short Course is to provide an understanding of the process and obligations of a due diligence investigation as it relates to acquisitions, disposals, major transactions and fund raising.

Practical advice and examples are presented on the fundamental principles and procedures of due diligence from a commercial, financial and people perspective.

There are far too many examples of organisations that run a successful business only to destroy value by paying too much for an acquisition, divesting at too low a price or making the incorrect financing decision.

Due diligence is not just about checking the financials. While this is a vital part, it should not be the sole focus to the detriment of other areas.  These other areas include the people, IT systems, the environment and intellectual property.  As time is often of the essence ‘due diligence checklists’ are summarised and the practical use of them discussed.

Linking strategy to financial reality is a critical success factor for any organisation. This Short Course aims to educate people in the appraisal of assets, the recognition of intrinsic value and fundamental valuation tools; common errors and misconceptions are highlighted and illustrated by way of practical example.

Topics Covered

Introduction
The importance of a thorough investigation
Establishing a common understanding : ‘why?’
Selecting and working with advisers.
Working with the target
Exercise:  constructing a checklist

Commercial due diligence
Top down analysis
Understanding the stage of the organization in its lifecycle
The link with strategy
Analysing the Five Forces
The changing environment: Environmental, social and political risks
Exercise:  Applying the principles to your own organization/project

Financial due diligence
The Balance Sheet
Contingencies, capital commitments, leases, etc
The intangibles – measuring and managing IP, brands, goodwill, etc
Forecasts – identifying variables most at risk
Exercise:  Financial Analysis
Exercise:  Measuring intangibles

Legal Due Diligence
Getting the structure right
Understanding legal documents, such as Sale & Purchase agreements
The legal environment:  Takeover Code, Employment Law, etc
Tax implications:  Capital Gains, assessed losses, GST, etc

Other issues:  Corporate Culture, IT, Intellectual Property and Environmental Due Diligence
Understanding the people perspective
Identifying Environmental risks
Quantifying the costs of meeting any continuing and/or future obligations.
Exercise:  constructing checklists

Who should attend

This Short Course will be relevant for Company Directors, Senior Management, Senior Financial Managers, In House Legal Advisors, Professional Equity Investors/Venture Capitalists and Professional Advisors in the private and public sector.

Outcomes

This Short Course will give you an understanding of the due diligence process from a financial and non-financial perspective. We will discuss the best ways to organise a due diligence – who to involve and when. How to identify, understand and manage risks is included as are checklists across many areas acknowledging that often time is of the essence in a due diligence process. The overall aim is to maximise the return on any investment.