In the early stages of the acquisition process, certainly before making any formal commitment, our clients often require an initial, low-cost review of their acquisition target, primarily intended to uncover any ‘deal-breaker’ issues (the ‘red flags’) before significant time and effort is invested.
The review also identifies issues requiring closer investigation later in the process (sometimes called ‘amber flags’) should our client progress.
Within these broad parameters, our scope of work varies widely. Sometimes we are requested to undertake a general review, other times our client may already have a small number of specific concerns and require a preliminary appraisal of these. Sometimes our work is restricted to analysis of material made available by the vendors, other times we may conduct interviews with management.
Typically we agree with our clients to “cap” the amount of work we undertake at this stage.
The objective is not to undertake exhaustive investigations, but rather to provide a quick, informed, expert assessment based on limited information. This work therefore draws heavily on our extensive knowledge and experience of the dynamics of the sector, the issues impacting on it, and the typical problems, threats and opportunities encountered by similar chemical companies.