This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here: http://flevy.com/browse/business-document/due-diligence-kickoff-presentation-701 Due Diligence Tasks - Identify key value drivers to confirm and potential deal breakers - Draw up due diligence request list and agree on process - Conduct data room visit, management presentation and site visit - Review and synthesize new data and develop follow-up questions - Assess management capabilities and cultural fit - Assess organizational strengths and weaknesses (by function) - Reach conclusions on key value driver issues and confirm ability to capture synergies - Refine valuation, synergies and transaction structure - Submit final due diligence report - Identify potential integration issues - Prepare first draft integration plan ("First 100 days")

1. Kickoff Presentation
Due Diligence Project ABC
Date

2. 3
Due Diligence represents a reasonably predictable chain of activities
within an unpredictable overall M&A process.
Typical M&A Process
Focus of the Due Diligence Kickoff
Bid preparation Bid process Negotiate final price
Site visits
Management
interviews
Data room
Document
request list
Due diligence
preparations
Close
the deal
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3. 6
Project Target: Team Roles and Responsibilities
Responsibilities Advisors (firm)Team / Role
Manage work and delegate tasks
Integrate data, analyses and recommendations
Communicate decisions & issues to leadership
xxx(XYZ)
Xxx (Investment Bank)
Project
management
Assess equipment/facility condition and needs
Determine cost reduction opportunities
Assess risks and potential mitigation costs
Assess safety performance
Audit state of target’s accounts
Assess insurance coverage and other risks
Assess adequacy of pension funding
Identify issues in integrating financial reports
Assess pending lawsuits and litigation
Evaluate intellectual property rights and risks
Assess financial impact of near-term products
Assess commercial value of rest of pipeline
Determine value of R&D capabilities to Clientco.
Operations
EHS
Finance, Risk &
Tax
Legal
R&D
xxx (XYZ)
xxx (XYZ)
xxx (D&T)
xxx (D&T UK office)
xxx (Investment Bank)
xxx (Outside Counsel)
xxx (XYZ)
Marketing Refine share, volume and price forecasts
Assess new market/customer opportunities
Assess current/potential customer base
xxx (XYZ)
xxx (XYZ)
ClientCo.
*Team leader
Assess costs and risks of IT integrationIT xxx (XYZ)
Identify labor issues (incl. union contracts)
Assess management and workforce
HR TBD (UK Benefits Specialist)
Refine valuation of target and synergies
Evaluate impact on ROCE and EPS
Valuation xxx (XYZ)
xxx (Investment Bank)
xxx
xxx
yyy
yyy
yyy
yyy
zzz
yyy
yyy
yyy
yyy
yyy
yyy
yyy
This document is a partial preview. Full document download can be found on Flevy:
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4. 9
Indicative Timeline (continued)
September October November
♦ Second round bid submitted. Possible need for
confirmation of financing
♦ Negotiations over terms
♦ Notified if selected as preferred bidder
♦ Confirmatory due diligence
♦ Negotiate sale and purchase agreement
♦ Put financing in place
♦ Board approves sale and purchase agreement
♦ Sale and purchase agreement signed
♦ Transaction announced
♦ Regulatory review
♦ Regulatory approval
♦ Deal completes
Week of 17 24 1 8 15 22 29 5 12
♦The team has not been given any indication of the timetable after 10 August
−this timeline represents a plausible best case
This document is a partial preview. Full document download can be found on Flevy:
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5. 12
Due Diligence Workplan
Operations Team
Dir. Manufacturing (leader), Manufacturing Mgr. , Industry Expert (External), Mkt. Specialist (External)Members
Objective • Evaluate condition, needs, maintenance history and potential capital needs of equipment and facilities.
Detailed Activity
• Confirm potential for smooth scale back of operations at T
• Confirm condition of equipment at T is good despite age
• Assess opportunity to capture 3-5% COGS savings
• Confirm that segment 2 can be isolated to L
• Assess expense to get out of D, M & H
• Confirm potential for extended, wide-ranging supply contracts with
parent (to reduce procurement dis-synergy)
• Confirm D has consolidated around profitable core of 2 machines
• ID crucial additional data required to confirm key issues
Desired End Product
Written summary of overall findings including
• Equipment and facility conditions
• Confirm/revise COGS and SG&A forecast
assumptions
• Confirm assumptions cost cutting and inventory
synergies
• Current and future maintenance expense and
CapEx
Materiality Threshhold: $5MM
Deadlines:
Preliminary Assessment: 5pm, 8/14
Full Report: 8/31
Data room contents
(See Data Room Index)
• 1.1-5, 3.1-2, 5.2, 8.6, 10.3,
11.4
This document is a partial preview. Full document download can be found on Flevy:
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6. 15
Due Diligence Workplan
Environmental & Safety Team
VP EHS (leader), EHS Attorney, M&A Consultant (External)Members
Objective • Evaluate risks and potential mitigation costs associated with current and past environmental and safety
practices.
Detailed Activity
• Identify risks and potential for significant environmental remediation
or litigation
• Assess safety record and identify safety risks
• Identify safety awareness and unsafe practices
• ID crucial additional data required to confirm key issues
Desired End Product
Written summary of overall findings including
• Environmental permits and audits
• Environmental management system
• Safety record and audits
• Safety management program
Materiality Threshhold: $5MM
Deadlines:
Preliminary Assessment: 5pm, 8/14
Full Report: 8/31
Data room contents
(See Data Room Index)
• 2.1, 2.2, 3.5, 6.8, 8.2-4
This document is a partial preview. Full document download can be found on Flevy:
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7. 18
Due Diligence Workplan
Valuation Team
CSO (leader), M&A Consultant (External), M&A Consultant (External), Investment Banker (External),
Investment Banker (External)
Members
Objective • Determine fair value of target; identify key value drivers affecting valuation.
Detailed Activity
• Analyze historical financials, recent budgets and business plans
• Receive input from various teams
• Adjust valuation model as necessary
• Identify key value drivers affecting valuation
• Refine sensitivity analysis around key value drivers
• ID crucial additional data required to confirm key issues
Desired End Product
Written summary of overall findings including
• Major risks associated with target’s revenue model
• Evaluation of target’s financial projections
• Confirmation of key value drivers
• Revised DCF valuation based on material new
assumptions from other teams
Materiality Threshhold: $5MM
Deadlines:
Preliminary Assessment: 5pm, 8/17
Full Report: 8/31
Data room contents
(See Data Room Index)
• 1.1, 1.2, 5.1, 6.8, 8.1-5
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/due-diligence-kickoff-presentation-701

8. 1
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