Deal Advisory
Traditionally, if operations due diligence was conducted at all, it was undertaken by a group of accountants who took a cursory glance at the cost base with neither employment of operational expertise nor focus on increasing the deal value. It was a ‘tick box’ exercise which assumed that the organisation were experts in operating and managing their cost base effectively and efficiently.
Through the increased involvement of operations expertise within the deal, diligence can become robust, and both buyers and sellers are able to extract significantly more value. It is now widely accepted that understanding and quantifying the impact of operational changes, especially cost reduction and efficiency increases, is critical within a deal.
Tougher markets and longer term investments are predicted for the future. To support this, stretching and robust management plans are increasingly required to ensure that the seller can maximise the sale value and that that the buyer, and their financial backers, are comfortable with the premium they have to pay to win the deal.
Newton’s core skills are second to none in this market. Our ability to analyse and understand opportunities across a business and quantify realistic financial impact from specific and robust actions is not a commodity. We are a specialist group of business and process engineers who can deliver the savings identified – guaranteed.
What we do
In a due diligence capacity, we work with both buyers and sellers to help ensure that the cost base is performing as described and its projections are realistic and achievable.
Projects requiring the identification and quantification of upside take a large step beyond our due diligence offering. They further leverage Newton’s core analytical skill set and experience to identify, justify and quantify unforeseen EBITDA and cash release opportunities. Where possible, we take a holistic view of the business from low-value add products to operating model, process and structural opportunities throughout the organisation. We look at the whole cost base and its impactable drivers to give our buy and sell-side clients a competitive advantage within the deal, or deal avoidance*, environment.
We carefully explain our rationale and give evidence for each upside identified to ensure buyers, banks and equity committees understand that the case is robust and reliable. This allows the required premium to be justified and paid.
If required, we will also implement the base upsides identified with Newton’s guaranteed delivery.
Typical projects
- Identify EBITDA improvements of 10–40%, depending on business type
- Identify cash release and capex reduction opportunities
- Supply cash flow impacts through to payback for opportunities identified
- Challenge key assumptions behind projections
- Identify unforeseen costs required to support future plans
