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    Financial DD

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    Cynthia Wibowo
    The document discusses financial due diligence for mergers and acquisitions. It describes asset acquisitions, which involve purchasing select assets without liabilities, and equity acquisitions, which purchase ownership and control of the target including all assets and liabilities. Financial due diligence ensures the target's financials accurately reflect its business and uncovers risks or opportunities. It focuses on validating valuation assumptions, understanding accounting and financial trends, analyzing the balance sheet, and gaining insight into operations, liabilities, and post-closing matters.

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    Financial DD

    Uploaded by

    Cynthia Wibowo
    128 views6 pages
    The document discusses financial due diligence for mergers and acquisitions. It describes asset acquisitions, which involve purchasing select assets without liabilities, and equity acquisitions, which purchase ownership and control of the target including all assets and liabilities. Financial due diligence ensures the target's financials accurately reflect its business and uncovers risks or opportunities. It focuses on validating valuation assumptions, understanding accounting and financial trends, analyzing the balance sheet, and gaining insight into operations, liabilities, and post-closing matters.

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    due dilligence

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    The document discusses financial due diligence for mergers and acquisitions. It describes asset acquisitions, which involve purchasing select assets without liabilities, and equity acquisitions, which purchase ownership and control of the target including all assets and liabilities. Financial due diligence ensures the target's financials accurately reflect its business and uncovers risks or opportunities. It focuses on validating valuation assumptions, understanding accounting and financial trends, analyzing the balance sheet, and gaining insight into operations, liabilities, and post-closing matters.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    128 views6 pages

    Financial DD

    Uploaded by

    Cynthia Wibowo
    The document discusses financial due diligence for mergers and acquisitions. It describes asset acquisitions, which involve purchasing select assets without liabilities, and equity acquisitions, which purchase ownership and control of the target including all assets and liabilities. Financial due diligence ensures the target's financials accurately reflect its business and uncovers risks or opportunities. It focuses on validating valuation assumptions, understanding accounting and financial trends, analyzing the balance sheet, and gaining insight into operations, liabilities, and post-closing matters.

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    You are on page 1of 6

    Merger and Acquisition

    Introduction to Financial Statements

    Business Conditions
    The process: what we buy and sell? What infrastructure is required?

    The Financial Position (Balance Sheet)


    Working capital: daily operating activities
    Long term asset: value of infrastructure and property

    The Statement of Profit or Loss (Income Statement)


    Gross margin: net sales minus the cost of production and distribution.
    Net margin: profit after paying administrative expenses

    The Statement of Cash Flow


    Types of cash flow: Operating, Financing, and Investing
    Porfolio approach: match inflows with outflows
    Asset Acquisition and Equity Acquisition

    Asset acquisition
    Purchase of a selection of tangible or intangible assets. No assumption of
    explicit or implicit liabilities. No change in ownership or control. Taxation
    athorities may levy capital gain or other sales transaction obligations.

    Equity Acquisition
    Purchase of equity control. Full assumption of all assets and liabilities,
    tangible and intangible, explicit and implicit. Acquirer assumes full right of
    ownership and control over acquired firm. Taxation authorities may levy
    assessments againts the expanded capital base of the combine entity.
    FINANCIAL DUE DILIGENCE
    Definition?
    PWC: ensure that the financial information of the target business reflects
    the current, sustainable run-rate of the business and can uncover any
    hidden risks or opportunities to help maximize the value of the deal. By
    having analyze and validate key valuation assumptions, we can focus
    attention on the factors in the business that will be critical to its future
    success.

    Deloitte.: Financial due diligence is conducted to support deal decision


    making, negotiating, and eventually, post-announcement planning and
    execution.
    FINANCIAL DUE DILIGENCE
    Focus Area?
    Investigate Valuation Consideration
    Quality of earning
    Indentify unusual or non-recurring adjustments
    Significant operating and financial trends
    Bridging operating periods

    Analyze the Technical Application of GAAP


    Understand accounting implications of potential deal

    Gain Understanding of Business, Operations, and Balance Sheet


    Working capital and other purchase price adjustment mechanisms
    Treatment of debt and other liabilities
    Conduct of business between signing and close
    Regulatory issues
    Representations and warranties, indemnification provisions
    FINANCIAL DUE DILIGENCE
    Focus Area?

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