Due Diligence Process: Phases and Key Activities PPT

This PPT slide, part of the 16-slide Commercial Due Diligence (CDD) - Due Diligence Process PowerPoint presentation, outlines the second phase of the Direct Investment Value Chain, focusing on the Due Diligence process. This phase is divided into 4 key components: Initial Screening, First Round Bid, Shortlist, and Exclusivity, each with specific activities and timelines.

Initial Screening serves as the first step, where deal sourcing is initiated through personal networks and approaches to sellers. This phase emphasizes an outside-in analysis, albeit with limited data access, and encourages seeking insights from industry experts. The goal here is to filter potential deals before moving forward.

The First Round Bid lasts 4 weeks and involves obtaining an information memorandum and conducting periodic meetings with management. Informal advice from consultants may be sought, sometimes from multiple firms. Discussions with at least 2 financing banks are crucial for analyzing debt potential. The outcome of this phase is the formulation and submission of an indicative bid, contingent on the due diligence process.

Next is the Shortlist phase, which spans 6 weeks. This involves formal due diligence based on access to a Data Room and management insights covering financial, legal, and commercial aspects. Financial structuring of the transaction is a key focus, alongside negotiations with the management team regarding potential contracts. A mark-up of the provided purchase agreement is also part of this phase.

Exclusivity is the final component, where the legal agreement with the seller is finalized. Confirmatory due diligence checks key terms in confidential contracts, and agreements often include management on remuneration packages. This phase also involves planning for the first 100 days post-acquisition, which is critical for executing identified improvement opportunities. Collectively, these phases ensure a thorough evaluation and preparation for a successful investment.

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Due Diligence Value Chain

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