When considering a potential investment, a due diligence assessment is essential to the decision making process. One of the most important investments an equity holder makes in a business is taking the time to determine the key aspects of the target’s business environment – from the day-to-day operational practices, to human resource considerations, to the necessary practices to maintain customers. A due diligence assessment provides the answers to these questions and others, allowing equity holders to determine the best structure for acquisition, or divestiture.
Due diligence assessments also provide information which can be used when crafting lending or investment instruments for the benefit of lending or investing entities. Although the structure of each engagement is unique, projects typically focus on answering the following questions:
- What is the target’s market position? This includes reviewing the competition, capabilities, market dynamics, and product innovation by segment.
- What are the target’s business plan execution capabilities? This includes strategy, management capabilities, cost structure, customer service, and quality.
- Are the business plan and projections attainable? What could be done to improve the likelihood of success.
- What is the financial strength of the target? This includes understanding how cash flows through the business and assessing the cash flow forecast, addressing quality of earnings considerations, and assessing debt service capabilities, including EBITDA performance and fixed charge coverage. What covenants or structures would improve the likelihood of success?
Focus Management Group rapidly assesses a Company to identify key issues and drivers, and assists clients in determining whether to proceed with a transaction, and under what terms and conditions a transaction could be successful.
Due Diligence Services for New Opportunities
Focus Professionals can support clients by providing financial and operational due diligence reviews to help assess possible risks associated with a potential acquisition target. Our services in this area include:
- Validation of historic and projected EBITDA
- Sensitivity analysis regarding financial projections
- Evaluation of the business model
- Analysis of the organizational structure
And these services result in the delivery of comprehensive report covering findings and uncovering potential Issues.
Due Diligence for Capital Raises
Focus offers due diligence for capital raises by providing in-depth assessments of various proposals or structures regarding the deployment of additional capital to support portfolio businesses.
Better information leads to better investment decisions. Our due diligence process is designed to provide a 360 degree overview of a business. We create a comprehensive synopsis of the Company’s current situation and forecast, and address the potential success of the Company’s plans for the future.