Etienne Lawyers assist you in preparing for or to undertake a due diligence exercise to sell or buy a business

1. Due Diligence When
Buying a Business
Presenter: Steve Brown
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2. Overview
 What is due diligence?
 What is the purpose behind due
diligence?
 Who Conducts due diligence?
 What is the due diligence process?
 Where is information obtained?
 Lessons from the cases.
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3. What is due diligence?
Due Diligence is:
Detective work;
Doing your homework;
Over coming unforeseen
and unwanted issues after
acquiring a business
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4. Purpose behind due diligence?
 To minimise risk
 The more informed a purchaser is
the more chance the purchaser
has to not loose money
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5. Purpose behind due diligence?
 Confirm what the  Investigate the state of
business is; management of the
business;
 Confirm that the
soundness of any  Confirm the status of
company to find pending lawsuits; and
contingent liabilities;
 Identify the extent and
 Avoid quantum of contingent
misunderstandings as liabilities
to the type and
condition of the
business being bought;
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6. Purpose behind due diligence?
 Essentiallygain information that
will be useful for
 valuing assets,
 defining representations and
warranties, and/or
 negotiating price concessions;
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7. Who conducts due diligence?
 Due Diligence Committee
 Comprised of purchaser
 Purchasers lawyer
 Purchasers accountant
 Purchasers financier
 Others that are need as required by the
transaction
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8. What is the due diligence process?
Preliminary Form
DDC
Investigation DD
Undertakes
of C’ttee
Detective
Target work
Use
Results to
negotiate
Due Diligence Purchase
Obtain Process terms
Target to
acquire
Acquire
Target knowing all that is to be known
Given the time and money the
Purchaser has/wants
To spent
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9. Where is information obtained?
 From the target, data room, employees
on-site investigations
 From the purchaser’s own knowledge
 From industry bodies
 From trade magazines
 From consultants
 From customers, clients and suppliers
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10. Lessons from the cases….
 Have a due diligence agreement Plessey Components Pty Ltd v
Cant
 Determine what is proper due diligence
objective or subjective test SDS Corporation Ltd v Pasdonnay Pty Ltd &
Anor
 Minimise disruptions to target SDS Corporation Ltd v Pasdonnay Pty
Ltd & Anor
 Get a clear understanding between the
parties Hayle Holdings Pty Ltd v Australian Technology Group Ltd [2000] FCA 1242
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11. Questions?
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