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Mergers and acquisitions - Transaction Services

Deloitte’s extensive M&A transaction experience, industry knowledge, and technical skill combined with our advanced data analytics capabilities give our clients a critical advantage. Our proven ability to leverage other parts of our business on transactions such as Deloitte Access Economics’ understanding of the macroeconomic and regulatory framework, enables us to offer you a unique perspective and a differentiated due diligence offering.

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As the economic outlook improves, corporates are looking closely at M&A transactions to enhance their competitive advantage. Private equity houses have also raised significant capital to invest in quality assets with a significant increase in activity expected over the coming year.

Deloitte’s extensive transaction experience, industry knowledge and technical accounting and tax structuring skill combined with advanced data analytics capabilities give our clients a critical advantage in making an informed bid.

Our Transaction Services team assists in:

  • Acquisition/pre-lending due diligence: providing insights on the key issues and risks associated with a potential target business or asset
  • Vendor due diligence: giving vendors greater control over the sale process
  • Vendor assist services: preparing a business for sale and optimising certainty over price through the sale process
  • Sale and purchase agreements: providing advice on adjustment mechanisms, accounting definitions and policies, as well as financial and tax warranties and indemnities
  • Capital market transactions: providing credibility to forecasts disclosed in public documents as part of the capital-raising process
  • Mergers and integrations, including synergies analysis, assistance with complex separations and post-merger integration to maximise value
  • M&A tax & structuring advice: providing advice to minimise transaction tax costs through tax-efficient deal structuring.

The M&A Transactions group also offers commercial and operational due diligence, which leverages the macroeconomic and policy understanding of Deloitte Access Economics to assist you in making an informed decision.

Our Transaction services team has extensive experience in due diligence, focusing on the specific needs of our corporate and private equity clients.

We can give you an early warning of issues that may affect values and purchase prices of a business, and any potential deal breakers, including:

  • Uncovering and quantifying industry and deal-specific risks
  • Identifying hidden costs, contingencies and commitments
  • Assessing maintainable earnings
  • Discovering tax exposures
  • Evaluating cash flows
  • Assisting in structuring purchase-price mechanisms

We also identify opportunities and potential upsides which may add value to the business.

Our vendor due diligence team is involved at the initial stage of the sale process to help you achieve a fully priced and clean exit.

We offer solutions up to a year before a planned transaction to consider whether a business is ready for disposal, identifying the areas requiring separation and areas of vulnerability that can affect value.

We also provide support through the sale process, working closely with our clients’ other advisors (for example, in relation to the sale and purchase agreements) to protect value and manage risk. We recommend commercial and contractual remedies to challenges identified during the vendor due diligence process.

Our sell side specialists provide bidders with independent and focused due diligence on the business for sale.

Our extensive experience working on a large number of transactions across a broad range of industries gives us deep insight into the stringent requirements of both corporate and private equity bidders, and their financiers. This ensures that all bidders have the information they need to bid with confidence and helps to maximise the sale value for the vendor.

Deloitte offers clients a wide range of value-added services to support the sale process. We have developed a vendor assistance service that mitigates potential impediments to the sale whilst de-risking and shortening the transaction process. This can be a precursor to a vendor due diligence or in some cases replaces a vendor due diligence, depending on the specific circumstances of the transaction.

We provide value-added services, including:

  • Accounting advisory services
  • Separation and carve-out
  • Preparation of data books
  • Data room support
  • Operational and commercial reviews
  • Advice on defined benefit plans
  • Project management
  • Risk review
  • Sale and purchase agreement advice
  • Tax vendor assistance
  • Vendor modelling

Benefits

Our vendor assistance provides ongoing support to a company considering the sale of all or part of its business. We provide support in all areas including:

  • Assessing whether the business or business units are ready for separation and divestment, following an initial diagnostic
  • Identifying the major areas where separation activity is required
  • Understanding the applicability of existing or past plans for proposed separation
  • Working with the vendor to establish and execute a carefully coordinated operational carve-out plan
  • Providing assistance to prepare standalone financial information for the carved-out business, including tax and defined benefit pensions information that is robust and fit for a sale purpose
  • Keeping control over the timetable at all stages of the project, including vendor due diligence if undertaken
  • Advising on best practice during a disposal process (such as restrictions on communications with potential purchasers)
  • Providing hands-on support through all stages of the sale process, including bidder meetings, advice on the sale and purchase agreement and completion accounts

The financial, accounting and tax aspects of a sale and purchase agreement can have a significant impact on the value of a transaction.

Our M&A Transactions group advises you on the cash accounting and tax implications of the transaction you’re negotiating. This includes the purchase price adjustment mechanism, the structure of completion accounts and the accounting policies adopted in the preparation.

We also provide structuring advice and review transaction documents from a tax perspective to protect you against any adverse consequences.

Drawing on our substantial experience in transaction disputes, and working closely with legal advisors, we can help in developing contractual solutions to accounting or commercial issues we identify.

This unique service gives you a significant advantage in the M&A process and could change the entire economics of your transaction.

Specialist expertise

We help you achieve a clean exit at a predictable price (sell side) or to set out the purchase price mechanism and have remedies in place if the business’ financial position is not as expected (buy side). Our Sale and Purchase Agreement (SPA) team can help you if you are:

  • Considering an acquisition or disposal
  • Submitting an offer letter or negotiating a memorandum of understanding
  • Reviewing a draft SPA
  • Drafting or reviewing completion accounts

As part of our SPA review, we are responsible for:

  • Proposing or reviewing a purchase price adjustment mechanism
  • Contemplating the impact of fixed price mechanisms such as a ‘locked box’
  • Considering the impact of ‘cash and debt free’ on equity funds flow
  • Considering the structure and terms of deferred payments linked to timing or performance-based measures (earnouts)
  • Providing advice in setting the level for target working capital
  • Considering the financial definitions for inclusion in a transaction contract
  • Reviewing or drafting accounting policies, hierarchies and procedures in relation to preparation and review of completion accounts
  • Review of warranties included in relation to Accounts

Through our involvement in the transaction and our role as the due diligence provider, we are close to the numbers and financial dynamics of the business early in the process. This makes us ideally placed to identify critical commercial issues when they can be converted into real value.

The flotation process can be extremely long and complex and absorb a significant amount of management’s time. We can quickly identify issues that may cause an IPO to be delayed or may erode market value. We have a strong track record with a wide range of successful floats.

Deloitte’s Transaction Services team has extensive experience in assisting companies through IPOs, rights issues, private placements and other debt and equity raisings that require an Investigating Accountant’s Report (IAR). An IAR involves an independent review of a company’s historical and/or projected financial information and any assumptions and material accounting policies applicable to the information.

The IAR supports the financial information included in a prospectus or other public disclosure documents. It also includes a review opinion of the historical and pro forma financial information and/or forecast financial information.

As part of this process, Deloitte will advise management on the content, structure and format of the disclosure information by:

  • Collating the historical and/or forecast financial information
  • Reviewing the information
  • Participating in due diligence

Effective tax, accounting and financial structuring are essential for a successful transaction.

A client who can identify a structuring opportunity can often pay more for an asset, enhancing their chances in a competitive environment.

At Deloitte, we work with you early in the process to identify structuring opportunities to maximise your competitive advantage in a bid or your tax returns on disposals.

Our team of tax and accounting specialists has experience across a wide array of industries and transactions to help achieve the outcomes you need.

Contact us

Jamie Irving

Partner, M&A Transaction Services
+61 02 9322 7213