We support our clients’ development or restructuring needs with a pallet of financial services which integrate Due Diligence, valuation, risk management as well as forensic accounting or compliance support.
Our range of action and structuration for ADD (Acquisition Due Diligence) what we mainly proceed in China as we can also provide services linked to the acquisition. In ADD, we will help you to understand the target, assess the risk, do the asset audit when needed by the Chinese authorities, and support you in the post-acquisition process.
We perform VDD (Vendor Due Diligence) to provide our customers with the data needed by a potential acquirer. Our objective is to maximize our client’s value by organizing and managing data, preparing a business plan, but also providing guidance to optimize your financial and tax status. Sometimes it means to restructure the organization of one or several companies.
When the time comes to sell your business, you need to have a fair valuation of it. We built an entire system for the valuation of non-stock companies in and out of China, to optimize the valuation of our customer assets in any aspect of their businesses as to obtain the best possible deal.
We are committed to an advisory about leads and a range of financial services to support customer transactions, including pre-deal analysis to the integration with the acquired company.
Due diligence is a process of verification, investigation, or audit of a potential deal or investment opportunity to check all relevant facts and financial information and to verify anything else that was brought up during an M&A deal or investment process. Due diligence is completed before a deal closes to provide the buyer with an assurance of what they’re getting.
Due diligence contributes to making carefully informed decisions by enhancing the quality of information available to decision-makers. Transactions that undergo a due diligence process offer higher chances of success.
From a buyer’s point of view (ADD)
Due diligence allows the buyer to feel more comfortable and secure about the transaction. In mergers and acquisitions, purchasing a business without doing due diligence substantially increases the risk to the purchaser.
From a seller’s point of view (VDD)
Due diligence is conducted to provide the purchaser with trust. However, due diligence may also benefit the seller, as going through the rigorous financial examination may, in fact, reveal that the fair market value of the seller’s company is more than what was initially thought to be the case. Therefore, it is not uncommon for sellers to prepare due diligence report themselves before potential transactions.
Before fully committing to a transaction, you must first prepare an acquisition due diligence report. You will need to be supported in preparing an Acquisition Due Diligence checklist to help you make sure you get the documents needed for an in-depth understanding of target companies. These documents cover different areas such as:
- Legal Issues
- Environmental Issues
Many other topics can be covered depending on the activity of the target, but you will need a professional to help you prepare and/or review all these elements.
A very important point to understand is that if a foreign company based outside China wishes to acquire a target company in China, they will need financial statements based on IFRS or management accounts that actually reflect the reality of the business. However, they will also need an official audit in PRC GAAP from Chinese authorities because these are the accounts officially declared.
The part that you will need to prepare in advance is the link between your management accounting and the official Chinese accounting in PRC GAAP. This is very important as any auditor or buyer will need to understand the bridge between these two sets of accounts. This process is very time consuming and demands a very deep knowledge of both IFRS and PRC GAAP. We have a well-trained team with many years of experience that can help the target or the buyer to prepare the list of all adjustments that were made from one accounting to another.
In China, the best time to prepare due diligence would be after the audit and post-audit of the target are completed. Therefore, the period to avoid would be between January and March. Anytime between April and November should be a good time as December is usually a busy month to prepare annual closing.