Equity Due Diligence

The first step taken by Campbell Dallas on all our due diligence assignments for funders and investors is to agree the scope of the engagement with our client in order to:

Fully understand the perceived risks already identified by the funder that may impact upon their ability to lend/invest.
Fully understand the proposed lending package including key covenants being discussed.
Fully understand the pricing methodology and the use of the diligence report, e.g. is the report for confirmation purposes or to be used in pricing negotiations.

Our approach to diligence assignments is to provide the investor with a concise and commercial document that clearly identifies the key financial and business issues facing the investor proposed investment.

In order to do this, at all times, we will ensure that we:

Work with the Investor
Only by working together with the investor, their management and utilising their in-house expertise will we be able to identify the lending risk areas and therefore any potential financial implications of these.
Adopt a commercial approach
By identifying the key business areas and risk at the outset of the assignment we will be able to focus our work on these areas where the commercial risks and benefits exist. We understand the sustainability and scale ability are key as well as projected cash flows and cash generation.
Agree and work to time scales
It is usual for us to work with a number of different advisers e.g. legal, commercial, environmental etc. Clear lines of responsibility and communication are therefore essential and this is of particular importance in due diligence assignments, where the time frame is short.
Ongoing reporting
The investor will want to be kept informed of all events and issues of importance, as and when they come to light. At Campbell Dallas we ensure that effective communication channels and progress meetings are established to ensure that the investor is fully aware of the latest position.

We always undertake a critical review of the reliability and the meaning of the information to ensure the identification of key issues. These issues may affect the following:

Decision-making - The fundamental decision as to whether to proceed with a transaction and investment.
Negotiation - Have matters arisen during the due diligence process that enables the deal structure and price to be renegotiated?
Structure - Other factors arising from the due diligence process, which will affect the structure of the transaction.
Protection - Are there risks (e.g. tax or environmental liabilities) that should be excluded from an acquisition or given protection by way or warranties or indemnities.
Completeness - Are there assets, contracts or intellectual property that are needed but not included in the entity being acquired or lent to, or alternatively assets or liabilities that the purchaser should avoid acquiring?
Post acquisition integration or restructuring - Are there systems weaknesses or changes to the business, which need to be made following the acquisition.

Our Success

Campbell Dallas Partners and Assistant Directors have been involved in over 70 equity transaction in the UK and Overseas. Deal sizes have ranged from only £500K to £780M, and Tom Faichnie previously worked in the leveraged finance team of a UK bank.

Recent assignments included Campbell Dallas carrying out a diligence exercise for Gresham Private Equity on their funding of the acquisition of North East Corrosion Engineering Limited.

In addition, in 2010 the Corporate Finance Team were named Dealmaking Team of the Year at the annual Deals:Dealmakers Awards ceremony. In winning the award, the judges recognised the team's unique approach to each transaction and as mentioned earlier, the team's ability to 'think outside the box' and bring creative solutions to perceived problems.

For further information or advice please contact Chris Horne on 0141 886 6644 or email corporate.finance@campbelldallas.co.uk.

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