Before Diligence · mandate
Due diligence, on the side that appoints us.
The price comes down to three figures: recurring earnings, net debt and the working capital requirement. We scrutinise them, on your side.
Before Partners carries out financial due diligence on SMEs and mid-caps: red-flag report, acquisition due diligence, vendor assistance.
The price comes down to figures. They still need to have been verified for you.
This is true when you buy, and it is true when you sell.
You are buying on the basis of the seller's accounts.
The earnings that really recur, the debt, what it takes to keep the business running: all of this can be verified. Every difference from the accounts presented becomes leverage on the price or on the warranty.
The acquirer will find what you have not looked at.
A sensitive issue discovered by the buyer is paid for twice: on the price, then on trust. Raised early and quantified, it can be discussed.
€305k on earnings, €2.1m on the price.
The price is calculated on adjusted earnings, not on reported earnings. In this example, the price is seven times earnings: €305k less on earnings means €2.1m less on the price.
difference between the value shown and the value the accounts justify.
- Reported earnings, financial year N (EBITDA, in €k)
- 4,200
- Owner-manager's remuneration, above market
- + 240
- Rent paid to the owner-manager's property company, below market
- − 180
- Litigation compensation, received once only
- − 350
- Relocation of the logistics site, once only
- + 95
- Doubtful debts, insufficiently provided for
- − 110
- Adjusted earnings
- 3,895
Example with fictitious figures, based on common adjustments. No real case is represented.
Three assignments, depending on what you have to decide.
Each is tailored to the size of the company, including when the company is too small for a large firm.
Red-flag report
When buying, the red-flag report tells you whether or not to go further. It examines adjusted earnings, the quality of revenue, net debt and the working capital requirement.
Acquisition due diligence
This is the full review of a target: its earnings, its net debt, its business plan, and the way each point moves the price.
Vendor assistance
When selling, we prepare the company and its figures before the data room is opened, and we quantify the sensitive issues in advance.
The experience of more than 400 engagements, the speed of a platform.
Transaction Services and Corporate Finance engagements supervised at Deloitte, then BDO. Most of them consisted of examining the accounts of a company being sold or bought.
Augmented analysis, judgement preserved.
Before OS, our platform, takes on the mechanical part. Judgement remains human.
The mechanical part, accelerated
The schedules, reconciliations and calculations are produced by the platform, which makes it possible to keep to the timetable of the transaction.
Judgement, under human control
The adjustments, interpretations and conclusions are those of Stéphane Hincourt-Thomassin, founder. They are never left to the machine.
Traced back to the entry
Every adjustment traces back to the accounting entry. The due diligence can therefore be audited line by line.
For the buyer, for the seller.
Before signing
You are committing to a price. We verify what that price rests on, and every red flag becomes an argument.
Before opening the data room
You take back control of your figures before the acquirer reads them.
The format and the timetable follow your transaction.
We start from what you have to decide, and from the date by which you need the answer.
- The formatWe set the format with you: a red-flag report to decide quickly, or a full review.
- The timetableThe timetable is that of your transaction. The platform takes on the mechanical part of the work to keep to it.
- The limitWhen an acquirer, a bank or a fund requires the signature of a recognised firm, we do not replace that signature.
A view, not just a report.
We deliver a report, like any firm. We add a view, we write the report for your negotiation, and we adapt to the size of your company.
A view
We do not stop at the findings. We tell you what we would do in your place.
Your negotiation
The report is written for your negotiation: each point in it is tied to the price or to the warranty.
Your size
You receive the same work as for a large transaction, in an SME-sized format.
Need someone to run the whole transaction?
The transaction is then led from the inside: we prepare the company, we look with you at what is handed to an outside firm, we run the process, then we follow up on what was signed. This is Before Leadership, your company's M&A function, before the transaction, during it, and after signing. If the signature of a recognised firm is required, we choose that firm with you and we discuss its work.
What we are asked most often.
Which firm for financial due diligence on an SME?
Financial due diligence on an SME is entrusted to a firm that scales the assignment to the size of the company and to what has to be decided. For SMEs and mid-caps, Before Partners carries out a red-flag report, an acquisition due diligence or vendor assistance, on the three points that drive the price: normalised EBITDA, net debt and normalised working capital.
What does a red-flag report cover before an acquisition?
A red-flag report covers adjusted EBITDA, the quality of revenue, normalised working capital, net debt and a series of red-flag tests. It is used to decide whether or not to go further, before committing to a full due diligence.
What is vendor assistance?
Vendor assistance is the work carried out for the seller, before the sale, to prepare the company and its figures: recurring earnings, net debt, the working capital requirement, and the answers to the questions an acquirer will ask. The sensitive issues are quantified before the acquirer finds them, and the documents are ready to be shown. Vendor assistance serves the seller and the seller's advisers, and them alone.
What is the difference between vendor assistance and vendor due diligence?
Both are requested by the seller and rest on the same work. The difference lies in who reads the result. A vendor due diligence is a report given to prospective acquirers: its author can commit to its content towards the selected acquirer, through a reliance letter. Vendor assistance remains at the service of the seller alone, and the acquirer does not rely on it. Before Partners carries out vendor assistance. If an acquirer, a bank or a fund requires the report of a recognised firm, we prepare that work with you and discuss it.
What is the difference between a due diligence mandate and an outsourced M&A function?
A due diligence mandate covers the figures of one transaction: a red-flag report, an acquisition due diligence or vendor assistance. An outsourced M&A function runs the whole transaction, from preparation to after signing, and the examination of a target's accounts is included. That is Before Leadership, the company's M&A function, run on a fractional basis.
An acquisition or a sale under way?
We look with you at what needs to be verified, and we fit the due diligence to the timetable of your transaction.
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