Target Due Diligence

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

Fully understand the benefits that our clients expect to derive from the transaction.
Identify the main risks involved to our client.
Fully understand the proposed funding package and consider funders issues.

Depending upon the timescales involved and objectives of our clients, the diligence will then take place in either one stage or two.

Stage 1

Having gained an initial insight into the transaction, we will then carry out a brief preliminary review of the target. At this stage our objectives are to:

Gain an understanding of the target and its management structure.
Establish the broad composition of the Balance Sheet, Profit & Loss Account, Cash Flow Forecast and trading prospects.
Obtain an outline of the accounting systems utilised by the target and its ability to produce reliable and timely information.
Identify the areas of risk and any major problems that may arise during the course of the detailed work.

Typically this initial review should take between two or three days and can be off site. Once complete it will allow Campbell Dallas to finalise the scope of work for the exercise, identify the key issues requiring attention, set a realistic timetable and milestones for the reporting at progress meetings.

Stage 2

Our approach to diligence assignments is to offer our clients a commercial document that clearly identifies the key financial and business issues facing them. In producing our report, Campbell Dallas keeps the prospective use in mind as outline our findings.

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

Decision-making - The fundamental decisions as to whether or not to proceed with the transaction.
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.
Risks - Are there risks that should be excluded from the acquisition or be given specific protection by way of warranties or indemnities?
Completeness - Are there assets, contracts or IP that are needed but not included as part of the acquisition or alternatively assets or liabilities that the client should avoid acquiring?
Post acquisition integration/restructuring - Are there system weaknesses or changes to the business which need to be made following the acquisition?

At each stage of the process Campbell Dallas will communicate with the client to ensure they are being kept aware of all issues arising and where risk is being increased or decreased.

Our Success

In 2010 the Corporate Finance Team were named Deal Making 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 speak to Chris Horne on 0141 886 6644 or email corporate.finance@campbelldallas.co.uk.

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