A new service for Private Equity & Venture Capital companies.

Following a request by a Private Equity funder early last year, to undertake a special investigation into the receivables of a target business at a pre-purchase stage, a report was provided which gave the investor sufficient information to negotiate changes in the deal and deferment in the purchase price.

As a result, I have now completed a number of assignments which have had the common theme of due diligence centred on the stock and receivables of a company, particularly the quality and value of debt.

The areas of investigation covered in the scope of work included the following;

1. Computer systems and software
2. Credit control
3. Quality of debt, invoice procedures and credit terms
4. Terms of sale/purchase and retention of title issues
5. Stock control systems
6. Exports, credit insurance and bonds.
7. Sales ledger analysis
8. Compatibility of debt with the invoice finance market
9. Identifying areas of weakness and risks

This is a specific and detailed type of service which normally falls outside the usual due diligence brief at pre-purchase stage of equity investment or venture capital deals and general review situations.

It is confidential, discrete and low profile keeping the work to the shortest time frame and least disruption to existing on site facilities.

As debtors have become a more important and major asset in the purchase price of a business, this type of service is seen as beneficial and cost effective, possibly reducing price expectations and deferring consideration.

It has also benefited existing portfolio investments which have required refinancing or a financial review, as a form of ‘health check’ prior to additional funding.