Expert financial advice for businesses and individuals.
Buy Side Due Diligence
In an environment in which competition for the right deal is strengthening, an acquirer needs to be certain that they can generate incremental value over and above the premium paid.
Due diligence gives acquirers comfort that they are paying the right price for the right asset, and involves a bespoke investigation of the target’s financial and operational performance and (importantly) future potential under new ownership.
Opportunities for improvements post deal are crucial, and whilst downside risks are the traditional focus of diligence, successful acquirers should also investigate (and estimate as part of their business case) any upside potential.
At Ballards LLP, we understand that financial due diligence is key, but also that operational due diligence is now an integral part of the value story.
- What do the cash flows from operations look like on a normalised basis?
- How does the business operate day-to-day and what is its cost base?
- How can the asset become more flexible adapting to constant internal and external changes?
- What upside opportunities exist and how does the business compare to peer performance?
Value to you
The purpose of due diligence is to drive post acquisition value for our clients. More specifically this means:
- Paying the right price for the future cash flows of the target business
- Operational and industry insight to give you an advantage in the acquisition process
- Cost reduction upsides that give downside protection if revenue growth fails to materialise
- Identification of areas of risk that may be outside your experience
- Identification of transaction issues that turn out to be deal stoppers or cause management teams to adjust unrealistic plans
Our buy-side due diligence service
We can help you……
Identify and validate value creation opportunities, and identify risks early.
- Ensure the financial fundamentals of the business are reflected fairly in the numbers
- Uncover potential issues that may impact the deal value before they arise (including financial and operational risks), and identify additional upsides
- Ensure clarity on the cost base and its drivers
- Provide independent review and challenge of management plans
- Assess the effectiveness of current operating processes and systems, including capacity / utilisation / efficiency / capex etc
- Identify and mitigate execution risk
- Identify any one-off or dual running costs
- Ensure risks are reflected in the deal valuation
Value creation
Value creation focuses on increasing revenue in a sustainable way without sacrificing margin, whilst at the same time optimising the operating cost base.
Revenue Growth
In an uncertain political and economic environment, it is increasingly important for companies to find effective ways to enhance their top line growth. Traditional blockers and challenges businesses typically encounter are:
- Operating within a market that finds itself stagnant
- A business model that has not been kept relevant or up to date in the eyes of its customers and consumers
- Being overtaken by existing competitors or competitors new to the market. This can be particularly challenging when competitors bring new technology into the sector.
Identifying growth opportunities is approached in a structured manner:
- Updating the business model, technology, or approach
- Getting to market quicker
- Examining the options of ‘Buying’ or ‘Building’ and the associated benefits and subsequent opportunities
- Increasing effectiveness of sales process
- Examining new product opportunities and success rates
- Examining the route to past success
- Refocus management on realigned goals
- Prioritize areas of growth, new markets, and development
- Identify and assess growth opportunities
- Exploit and convert easy opportunities and ‘low hanging fruit’
Cost control
- Lowering SG&A costs by streamlining processes, implementing shared services where possible, and delayering management
- Examination and lowering of fixed costs
- Reduction of procurement costs via scaled economies
- Improving cash forecasting and developing processes to release cash quickly
- Defined controls on capital investment and monitoring of benefits
- IT process improvement and cost reduction
KPI Performance Management
- Assess efficiency, quality, and timeliness of reporting processes and management input
- Evaluate how current KPIs compare to management and investor needs
- Analyse failures of KPIs to meet management and investor needs
- Identify the KPIs of most relevance across the company
- Analyse the issues impacting reporting speed and quality
- Establish effective reporting of the most relevant KPIs
- Outline hierarchy of reporting
- Ensure KPIs are reported correctly in updated reporting systems
- Implement and maintain identified changes in all aspects of the company to strengthen management reporting and use of KPIs
- Embed recurrent practices and standards within business
- Monitor and review performance
Divestiture
- Divestment to a trade buyer
- Divestment to a financial buyer, such as a private equity house
- An initial public offering (IPO)
- A carve-out to embark on a joint venture with other parties
- Exit readiness diagnostics
- Vendor assistance with the requirements of a buy-side due diligence
- Sell-side due diligence
- Portfolio analysis and strategic advice
- Financial and operational carve-out advice
- Organisation design
- Future-state and day one operating model design
- Help in making decisions to sacrifice speed or value to improve the other
- Identification of opportunities for value creation
- Planning and structuring for transitional services agreements (TSAs)
- TSA exit and transition planning
- Business closing issues including Day One readiness, treasury financing, accounting deconsolidation, management changes and relations with workforce
Is this relevant to my business?
This service is relevant to companies wanting to:
- Explore potential exit routes
- Maximise value potential on exit
- Prepare differentially for all potential types of buyer
- Perform specialist options analysis on portfolio businesses
- Carve out a business to operate independently
- Carve out a business to be sold
When might my business look at this?
The following could cause your business to look into our divestiture advice service:
- Retirement or moving-on
- Lack of information provided to investors resulting in a business being undervalued: in this instance, divestment could boost shareholder value
- Underperformance within a company or business
- Insufficient business models or requirements
- Need for capital, for example if bankruptcy occurs
- Need for higher investment for growth to continue
- Changing preferences amongst consumers
- Changes in competitors
- Change in government policy or regulatory requirements
- Scrutiny triggered by transformative acquisitions
Kind words
Insight
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Additional Tax Relief for R&D Intensive SME Companies
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What Is The Patent Box Regime?
The UK government implemented the Patent Box tax structure in 2013. The regime offers a lower rate of corporation tax on earnings from patented discoveries in order to encourage businesses to invest in research and development (R&D). In this article, we will explore what the Patent Box regime is, how it works, and what kind of projects it could be used for.
Ballards Have Charity Efforts All Wrapped Up For Worcester’s Foodbank
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Are you aware of the inheritance tax exposure on your business assets?
Business owners, are you aware of the inheritance tax exposure on your business assets?
If the answer is no, then you’ll want to watch this video, as I may have a great solution.
Using Digital Technology To Make Better Business Decisions
In today’s world, businesses are facing increased pressure to make informed decisions that drive growth and success. To do this, they need access to accurate and timely data, and the ability to analyse it effectively. Digital technology has revolutionised the way businesses operate, and can be a powerful tool for making better business decisions.
Property Watch – January 2023 UK residential property transactions
In this article, we look at the UK residential property transactions for the UK housing market transactions for the year to 31 January 2023 with comparatives for the same period to January 2022.
Mortgage relief restriction – Does the change in interest rate affect landlords?
You will be aware of the recent increases in the Bank of England base rates which currently stands at 4%, up from an all-time low of 0.1% only just over a year ago. What you may not have realised yet is what effect this has on a non-corporate landlord’s tax position.
With the advent of higher interest rates, the restriction to claiming higher rate tax relief on mortgage interest is becoming increasingly important.
Basis Period Reform: Everything you need to know
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Property Watch – December 2022 UK residential property transactions
In this article, we look at the UK residential property transactions for the UK housing market transactions for the years 31 December 2021 and 2022 as reported by HMRC through Stamp Duty Land Tax (SDLT) reporting.
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Changes to VAT penalty regime
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Teens to Retirees – HMRC reveals who files a tax return
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How long do we need to retain business records?
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Property Watch – November 2022 UK residential property transactions
In this article we look at the UK residential property transactions for the UK housing market transactions for the years 30 November 2021 and 2022 as reported by HMRC through Stamp Duty Land Tax (SDLT) reporting.
Selling Residential Property – Do I need to pay tax?
This is a question I’m often asked; in this video, I give my answer in relation to selling residential property and paying tax on the sale.
The tax implications of making a loan to an employee
Businesses with spare cash are increasingly helping out their employees with short-term loans, especially due to the cost of living increases. If you are thinking of doing so, here are the things you need to know.
Sign of the times as food bank chosen by accountants
Ballards will be working with Worcester Food Bank to provide emergency food parcels to people in the city.
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R&D Changes – Autumn Statement
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Business Records – How long do we need to retain them?
Having complete records in place allows you to answer any queries HM Revenue and Customs may have. But how long do you have to retain these records? The answer depends…
Are there tax implications of making a loan to an employee?
Businesses with spare cash are increasingly helping out their employees with short-term loans, especially due to the cost of living increases. If you are thinking of doing so, here are the things you need to know.
5 Things you didn’t know about Cloud Accounting
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Property Watch – October 2022 UK residential property transactions
In this article we look at the UK residential property transactions for the UK housing market transactions for the years 31 October 2021 and 2022 as reported by HMRC through Stamp Duty Land Tax (SDLT) reporting.
Risk mitigation in project management
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Making Tax Digital is coming on the 6th April 2026, are you ready?
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A modern technology fail
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Property Watch – September 2022 UK residential property transactions
In this article we look at the UK residential property transactions for the UK housing market transactions for the years 30 September 2021 and 2022 as reported by HMRC through Stamp Duty Land Tax (SDLT) reporting.
Failure is an option – R&D Tax Relief
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Property Watch: August 2022 UK residential property transactions
In this article we look at the UK residential property transactions for the years to 31 August 2021 and 2022 as reported by HMRC through Stamp Duty Land Tax (SDLT) reporting.
Cars and Commercial Vehicles – Everything you need to know
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Looking for R&D Specialists – Introducing our Support Service for Professionals (SSFP)
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Property Watch: Residential property trends 2005 to 2022
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Divestiture: issues in separation and integration in unprecedented times
When a business takes the decision to divest a part of itself, there are a number of complicating factors that stand in the way of success, for both the seller and the acquirer. These have only been exacerbated recently by the long tail of COVID, by the war in Ukraine, by supply chain issues, by the tightening labour market, and by rapid inflation. However, the money is still there for good deals, both in the full coffers of PE houses, and from debt funders looking to deploy cash.
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Looking to set up a Furnished Holiday Let business?
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I have inherited a share of property. Does this have any tax consequences?
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A spotlight on future retail technology trends
I recently attended the Retail Technology Show at London Olympia. This was my first in-person expo since before Covid, and it was a refreshing experience to catch-up with technology suppliers and retail ex-colleagues in person.
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Both businesses and employees are facing pressure on their finances arising from the recent tax hikes and the high levels of inflation that we are all experiencing. Now is therefore a good time to consider employee incentives that have minimal upfront cash outflow whilst providing potentially significant long-term rewards. This will help motivate and retain key members of your workforce.
For companies these can take the form of share incentives where an employee is provided with either shares, or ‘options’ to acquire shares at a future date, normally on the occurrence of certain events or performance targets being achieved.
If I make a profit when selling or trading in my car, is this taxable?
In the current second-hand car market, it is common for people to be offered payment on return of their vehicle at the end of a PCP lease agreement. One would imagine that if the leaseholder refused this offer and sold privately, they may be able to make a greater profit. Alternatively, if a car has been purchased second-hand previously, it may be possible to sell this and even make an overall profit.
So, the question is, is this taxable?
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When a shareholder sells their shares, they are normally subject to capital gains tax on the disposal. There is however a way to undertake a company disposal and not pay any tax at all. The way to do this is to sell to an Employee Ownership Trust (EOT). EOTs were introduced in 2014 to encourage greater employee ownership of companies inspired by the John Lewis business model.
Since their introduction, popularity of this business model has been gaining momentum with more and more companies choosing to adopt this structure.