Due diligence support — leading the review instead of enduring it
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- Initial conversation free of charge, without obligation and strictly confidential
- Scope defined by risk, not by the length of a checklist
- One contact person for all specialist advisers involved
- More than 100 completed transactions over more than 15 years
Due diligence rarely decides whether a transaction happens — it decides at what price and under which liability rules. Every finding ends up in one of three drawers: a purchase price reduction, a contract clause or a termination.
For sellers, due diligence support means steering the review instead of enduring it: which documents when, in which order and with which explanation. For buyers it means concentrating the scope on the points that can really cost money.
The review areas
Financial due diligence
Sustainable adjusted result, quality of earnings, working capital, net debt and the planning assumptions.
Tax due diligence
Open proceedings, audit risks, transfer pricing and liability arising from the past.
Legal due diligence
Corporate law, material contracts, change-of-control clauses, intellectual property rights, employment law and litigation.
Commercial and operational
Customer structure, dependencies, sales model, supply chain and any backlog of investment.
IT and data
System landscape, licences and data protection.
A clarification on roles: the specialist reviews are performed by auditors, tax advisers and lawyers. We define the scope, steer the process and translate the findings into price and contract. We provide no legal, tax or audit services.
From the buyer’s perspective
What is most often overlooked: working capital and a backlog of investment, dependence on individual customers or individual people, change-of-control clauses, rights to software and trade marks, and open proceedings.
Depth of review costs money and time — the craft lies in the tailoring. We recommend drafting the review plan before the letter of intent, because the letter of intent defines exclusivity and the time window. The process is described under buying a company and the process of a company purchase.
From the seller’s perspective
Preparation beats defence. In larger transactions a vendor due diligence is customary; in smaller ones a structured internal review is usually enough.
A finding that the seller presents and explains themselves costs considerably less purchase price than the same finding found by the buyer. More under preparing an exit, vendor due diligence and in our due diligence checklist.
The data room
Structure the data room by law, finances, tax, personnel, contracts, IT and real estate. Release is staged according to the state of negotiations, and access is logged by individual person.
Questions and answers belong in a defined procedure with one responsible point of contact, not in ad-hoc emails. Completeness and consistency matter: two versions of the same figure in the data room cost more trust than one bad figure. The structure is provided by our M&A data room manager.
From the review into the contract
Purchase price
A reduction where findings can be quantified, and adjustment through the working capital and net debt mechanism. More under purchase price mechanics.
Warranties and indemnities
For risks that cannot be quantified: liability caps, time limits and de minimis thresholds.
Holdbacks and escrow
Parts of the purchase price are withheld for a defined period.
Termination
When a finding destroys the basis of the transaction — better before than after closing.
Frequently Asked Questions
- What is examined in a due diligence?
- Usually finances, tax, law, the operating business and IT. The scope depends on the size and risk profile of the transaction.
- How long does a due diligence take?
- With owner-managed companies usually a few weeks. The duration depends less on the scope of the review than on the quality of the documents.
- Who bears the costs?
- In principle the side conducting the review. In a vendor due diligence they are borne by the seller, who makes the report available to the bidders.
- What is a red flag review?
- A deliberately shortened review that only looks for findings which materially change the transaction or the price. Useful in smaller transactions or early in the process.
- Does this replace my tax adviser or lawyer?
- No. The specialist reviews are performed by your advisers. We define the scope, steer the process and translate the findings into purchase price and contract.
- What happens to the findings?
- They are translated into purchase price reductions, warranties, indemnities or holdbacks — or they lead to a termination.
If a review is coming up, the initial conversation clarifies free of charge which scope is appropriate and how the process is led.