Transaction evaluation

Transaction evaluation

During the early stage of a potential transaction we will help you assess the strategic fit and provide preliminary evaluation of the deal.

At the early stage of a potential transaction we will help you assess the strategic fit

How can we help?

Pre-deal evaluation

During the early stage of a potential transaction we will help you assess the strategic fit and provide preliminary evaluation of the deal. At this stage, we have usually no or only very limited access to the target. Our services include the identification of risks and deal breakers, an assessment of the strengths and weaknesses of the target, and planning and structuring of the prospective transaction process. 

Financial due diligence

Our approach to due diligence differs from a "traditional" analysis of a business. By understanding the rationale for your proposed investment, as well as those matters which you have already identified as being of concern to you, we will focus on the issues that are the most important for your investment decision. 

We can assist in: 

  • Identifying risks and opportunities which affect value and impact your negotiating position 
  • Quantifying the impact of these issues on valuation and negotiating position 
  • Highlighting areas where contractual protection or specific post-deal actions are required  

Our analysis usually includes such areas as historical / sustainable / forecast financial performance, financial position, indebtedness, reported or unrecorded contingencies, working capital, fixed assets, quality of the financial information, carve-out adjustments, key financial terms of existing contracts. 

Commercial due diligence

Commercial due diligence is a process of appraising a target's relative market position and probability of its success in the market place. We tackle the issues at the heart of the business: market conditions and outlook, macroeconomic influences, industry structure, regulatory environment, competitive position and relationship with key customers and suppliers. We consider, in particular, the impact of these factors on the target's ability to deliver its forecast results which form the basis of evaluation of the company. Our integrated approach, which combines commercial, financial and tax due diligence services gives you better understanding of the business.  

Tax due diligence

Taxes are important part of any business, especially in Azerbaijan due to regulatory environment and their impact on financial performance. We help potential investors, lenders, and owners to understand key tax risks and issues and better prepare for a deal. The scope of our work may vary from a focused tax analysis in case of pre-deal evaluation to a full-scope tax investigation in case of advanced negotiations. As taxes are paid at entity level but targets are often a group of companies, our work is structured to cover taxes both at group and entity level. 

If you are the investor or lender, we can help you to identify and assess significant tax risks of a target and decide whether they are deal breakers or strong negotiation points. If you are vendor or borrower, we can help you to identify tax risks and maximum exposures so that you are prepared for negotiations, identify tax assets and benefits and present them in the right order, timely decide on tax restructuring of your business in order to increase its value.

Our analysis usually includes such areas as historic tax risks, historic/current/forecast tax burden and tax assets/liabilities, differences between actual and expected tax burden, tax adjustments to financial position as if no questionable tax strategies were used, key tax terms of existing contracts and industry-specific tax issues. The results of tax due diligence are usually used to negotiate price adjustments, change deal structure from share deal to asset deal, negotiate tax indemnities/warranties and tax points in disclosure letter.

Legal due diligence 

Legal review of the company's affairs or assets is essential in the event of their acquisition, restructuring or placing of its shares in the course of private or public offering. Our lawyers perform in-detail review or corporate, contractual, employment, real property, IP, litigation and compliance matters which enables identify risks associated with the target company or asset and reveal obstacles to be mitigated pending the transaction or restructuring. The results of the legal due diligence normally forms a basis for drafting transaction documentation. Where legal due diligence is commissioned by the purchaser, we then reflect our findings in the course of negotiation of the vendor's warranties and indemnities. When we act for the vendor, legal due diligence reviews helps in drafting disclosures against the warranties.

Depending on nature of the transaction, our lawyers may be involved in stand-alone regulatory, HR, environmental due diligence reviews.

Refinancing due diligence 

If you are the borrower - We can assist you in searching for new lenders / investors or re-negotiating debt terms with existing ones. Our review of your business, performed with a specific focus on the ability to repay your debt, can assist you in developing an appropriate financing structure. This will help you to be prepared to talk to new potential financiers identified through our extensive network of contacts, including various debt and equity investors, distressed assets funds and other specialized finance providers.

If you are the lender - We can assist you in your borrower assessment process when your own resources and / or experience are limited. Our dedicated team will review the borrower's current financial position and performance, check the quality and reliability of cash flow projections, as well as reporting and control systems. We also perform market and industry assessment, evaluate customers, suppliers, existing lenders and other influential third parties. Our actual scope of work will be tailored to meet your specific requirements on a case-by-case basis, which will be discussed in detail before the engagement.

Synergy due diligence

We identify, test and, where possible, quantify commercial and operational variables that are likely to affect the ability to achieve synergy targets; these include revenues synergies, such as cross-selling of products, and cost synergies such as overhead reduction, working capital requirements and increased buying power.

Operational due diligence

Operational due diligence provides a robust perspective on what you can expect from the targets future operating performance. We measure the effectiveness and efficiency of the company's business units against management's own performance targets, as well as industry benchmarks. The focus of our work is the identification of value potential hidden in the operations and advice on how it can be accessed

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