Mergers & Acquisition Due Diligence. A private equity firm considering the acquisition of an oil & gas services company wanted to validate the purchase price, assess management team, effectively measure the marketplace and the target’s position in it, and provide strategic recommendations.
- Addressing the organizational and operating model challenges resulting from mid-management gaps
- Two core business with different market segments
- Confidence in cyclical revenue forecast
- Customer concentration
- Provided a full service approach to assessing the acquisition target including market and stakeholder analysis, finance, HR and IT
- Analyzed market conditions and key stakeholders such as suppliers, competitors, and customers through primary and secondary research. Stress-tested forecast.
- Prepared full financial schedules to determine quality of earnings
- Completed IT audit to determine gaps and alignments with key processes
- Completed HR review of senior executives
- Provided comprehensive opinion on acquisition target to allow client to make educated decision on a path forward
Impact on client’s business:
- Incentica concluded the company had an advantageous revenue and cost model with sticky customer relationships. However, risk was present due to: compliance and health & safety nature of the business, lack of management transition plan, and customer concentration that introduced a multiples gap with the LOI. The transaction was delayed while the target company made changes to address the issues identified during due diligence.
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Steve Williams CExP™, CMAA
Partner, Incentica Business Plans
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