Commercial Due Diligence (CDD) - Due Diligence Process (PowerPoint PPT Slide Deck)

DESCRIPTION

This product (Commercial Due Diligence [CDD] - Due Diligence Process) is a 16-slide PPT PowerPoint presentation slide deck (PPT), which you can download immediately upon purchase.

Commercial Due Diligence (CDD) is the process undertaken before a transaction is finalized to evaluate the target/investment and attain a high degree of confidence in the assumptions (e.g., financial, operational) underlying the bid.

Due Diligence is the second phase in the 5-phase Direct Investment Value Chain:

1. Deal Sourcing
2. Due Diligence
3. Deal Structuring
4. Value-added Monitoring
5. Monetization

This presentation introduces the Direct Investment Value Chain. It further breaks down the Due Diligence phase into a 4-phase process and delineates the Preliminary and Detail Due Diligence Process steps. This framework is developed within the advisory perspective of a management consulting firm, although it can also be used directly by the buying company.

This document also includes slide templates you can use in your own business presentations.

This deck is an excerpt from our more comprehensive framework, Commercial Due Diligence (CDD).

This PPT provides a comprehensive breakdown of the Due Diligence process, starting with the Initial Screening and moving through to the First Round Bid. It details the key activities involved in each phase, including the creation of standardized memos and the rigorous analysis of financial models. The framework is designed to ensure that all critical aspects of the target investment are thoroughly evaluated, providing a robust foundation for decision-making.

The presentation also covers the Commercial and Strategic Due Diligence processes, highlighting the importance of preparation and execution. It includes detailed templates that can be customized for your specific needs, making it a practical tool for any organization involved in direct investment. This document is an essential resource for professionals looking to streamline their due diligence efforts and maximize the value of their investments.

Source: Best Practices in Due Diligence PowerPoint Slides: Commercial Due Diligence (CDD) - Due Diligence Process PowerPoint (PPT) Presentation Slide Deck, LearnPPT Consulting

PPT SLIDE DEEP DIVES

Structured Approach to Initial Investment Screening

This PPT slide outlines the initial screening process for direct investment, detailing 3 key activities: Conduct Preliminary Evaluation, Produce Investment Memorandum Review, and Conduct First Round Review with Decision Makers. Each activity is accompanied by specific key tasks and estimated timeframes, providing a structured approach to investment assessment.

The first activity, Conduct Preliminary Evaluation, emphasizes the need for a swift review of the company's business and management structure. A standardized one-page summary of the investment opportunity must be completed within 48 hours, facilitating a timely decision on whether to proceed. Assigning a core team of 2-3 individuals to the deal is also highlighted, ensuring focused attention on the opportunity.

Next, the Produce Investment Memorandum Review involves a more comprehensive analysis. A 5- to 7-page memo is to be completed within one week, summarizing key issues, opportunities, and preliminary assessments. This phase includes gathering detailed feedback from other team members within 2 to 3 days and conducting a “beat-up” session with both internal and external stakeholders. This collaborative discussion aims to challenge assumptions and explore potential downside scenarios, ensuring a thorough evaluation.

The final activity, Conduct First Round Review with Decision Makers, focuses on circulating a revised investment memo for approval to proceed with in-depth due diligence. This step is crucial as it consolidates insights from previous evaluations and aligns decision-makers on the next steps, which should be completed within 1 to 2 days.

Overall, the slide presents a clear, methodical approach to initial investment screening, emphasizing speed, collaboration, and thoroughness in evaluation.

First Round Bid: Key Due Diligence Activities

This PPT slide outlines the First Round Bid phase of the Direct Investment Value Chain, emphasizing the detailed due diligence processes that typically span about 4 weeks. It presents a structured approach to evaluating potential investments through a series of key activities.

The first activity involves assessing the management group. This step is crucial for understanding the leadership's capabilities and credibility. It includes meetings to discuss performance incentives and succession planning, which are vital for long-term stability.

Next, the slide highlights the importance of conducting reference checks. Engaging with customers, suppliers, and former employees provides insights into the company's reputation and operational effectiveness. This step is essential for validating the management's claims and understanding external perceptions.

Analyzing the industry and company follows, where extensive discussions about the investment opportunity take place. This includes reviewing economic forecasts and tax implications, which are critical for understanding the broader market context.

The valuation and scenario analysis stage involves creating a detailed financial model. This model should outline the key business drivers and stress-test management assumptions. Such rigorous analysis is necessary to anticipate potential challenges and assess the viability of projections.

Finally, external discussions with experts are recommended to examine environmental, structural, and legal issues related to the investment. This comprehensive approach ensures that all relevant factors are considered before making a decision.

Overall, the slide provides a clear roadmap for potential investors, emphasizing the importance of thorough due diligence in mitigating risks and making informed investment decisions.

Due Diligence Process: Phases and Key Activities

This PPT slide 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.