Due Diligence



Enable the buyers to find out all they should reasonably know about what they buy, these are material facts to help them decide whether to proceed the transaction or not.

Purchasers who need to be provided with a level of comfort that the financial statement can accurately reflect all the assets and liabilities of the target company.

In the buyers’ perspective, they should know how to tackle with those risk factors. These risks cover:

the political risk associated with the country in which the target company is based; i.e. to acquire a target company formed in South Africa and its assets may easily be expropriated;
the accuracy of all the financial information of the target company – the past audited accounts plus the latest management accounts, cash flow statement and profit forecast statement for the future, used to reveal whether any material misstatement of profit and the net worth of the target company.


Initial parameters:
These buyers require a preliminary evaluation of the key important areas for the deciding such acquisition transaction, that evaluation is concerned about the issues in respect of the key personnel, suppliers and customers of the target company and other critical factors.
Preparation and execution of the preliminary investigation
It is used to identify deal-breaking issues upfront before money and other valuable resources are committed to performing detailed investigation. Some possible issues during the exercise are:

concealment of material facts and figures;
insufficient internal controls policies;
non-compliance of or in-adventurous interpretation of contracts, legal provisions, accounting principles, policies and standards;
rapid employee turnover and core management succession;
material contingent liabilities;
statutory non-compliance issues;
industrial sickness;
legal proceedings;
The material misstatement of assets and liabilities recorded in the management account and the audited financial statements.

We provide the financial due diligence services to any potential clients who are going to participate in any acquisition transaction and please feel free to contact us.