Due Diligences – Aquismart performs opportunity due diligence
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There are a number of different due diligences that may be performed by a company when looking at acquiring a business. These due diligences can be divided into the following categories:
Confirm that the information supplied to the buyer is in line with the actual information of the company.
Looking for weaknesses/“black holes” in the business to be acquired that will affect the decision of the buyer.
To determine the price of the business and the value that the buyer will be prepared to pay.
Identifying cost reduction or income improvement opportunities in the business that will allow the buyer to improve the profitability of the business.
Our approach in identifying the opportunities was:
Aquismart has recently been involved in an opportunity due diligence for a client. The result of the exercise was that Aquismart consultants identified a 13% cost reduction in a multi-million Rand monthly cost structure of the company as well as a 10% reduction in capital requirements.
Understanding all the cost drivers in the organisation and the impact that these drivers have on the cost structure of the company.
Reviewed the fixed assets in the company to determine current utilisation and capital recoupment opportunities.
Evaluated the current cost management system within the company to determine the effectiveness of the system.
Evaluated the effectiveness of the current account structure and the management requirements for this system.
Evaluated the effectiveness of the capital control system.
Identified the shortcomings in the current information management systems and identified the opportunities within these systems.
