Strategic Plannning: Mergers & Acquisition Due Diligence

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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.

Strategic Plannning: Mergers & Acquisition Due Diligence

Client challenge

  • 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

Incentica’s Solution

  • 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.
Steve Williams CExP™, CMAA

is a Partner at Incentica Business Plans in Calgary. He is a certified exit planner and mergers & acquisitions advisor with 30 years of senior management and executive experience. Steve has written over 130 business plans and succession/exit plans for some of the biggest best, including Fortune 500 companies. Steve is a Business School grad and Harvard educated.

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