Investors, Private Equity and M&ADue Diligence Support
Global Advisors are acknowledged global due diligence experts. Recent and current projects include European, South African, West African and South-East Asian clients and in the food, agricultural and energy markets.
Value-Adding Strategic Due Diligence
Global Advisors performs strategic (also referred to as commercial) due diligence work across industries and countries.
Global Advisors has partnered from market scanning through to target identification, screening and prioritisation, approach, offer design, strategic due diligence, deal structuring, negotiation assistance, drafting of term sheets, definitive agreement design and signature, facilitation of legal process completion, antitrust authority submission support, post-deal strategy and implementation support.
“Global Advisors due diligence enables strategic conversations with a management team about their business and their industry.
This kick starts a truly value-adding partnership between a PE fund and the owner manager.“
Private Equity firm director
Global Advisors has a considered approach to strategic due diligence – based on our strong strategy and quantitative skills and experience. We ground this in a pragmatic view.
Strategic due diligence ensures that no two transactions are treated the same way – each deal has its own value drivers.
Our strategic due diligence approach seeks to answer two key questions:
- Is the target company an attractive acquisition?
- What are the uncertainties that may limit unlocking the target value?
Our DD Credentials
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A strategic approach to value
Ask the big questions to confirm an investment thesis
Understand the role played by uncertainty on realising a static valuation
Determine standalone value based on a rigorous understanding of cash flows
Present the information required to make an informed investment decision which is aligned with the investment thesis
Full potential – an enduring underpin to value creation
Full potential describes the act of driving a core business towards a pareto efficient optimum strategic position and set of results.
The very act of defining a core business can be the most value-adding strategic step a business can undertake.
Top performers continually re-examine their markets to find the next opportunities to improve performance and drive further growth in their core business.
Companies almost always under-estimate the returns on reaching full potential in their core. Instead, companies tend to diversify – often with increased leverage – in attempts to unlock new growth opportunities to compensate for an underperforming core business. In doing so, they further weaken their core. The combination of weakened profits and increased leverage often results in a debt crisis.
Companies ignoring the returns on reaching full potential represent attractive investment targets. Targeting full potential represents the strongest strategic underpin to value creation for any investment.
Three steps to full potential
Global Advisors partners investors to understand “full potential” opportunities during due diligence and deliver against these as value creation opportunities.
- Top performers target full potential in their core business, expand into logical adjacent businesses (that both buttress the core and exploit synergies with new adjacencies) and proactively redefine the core business in response to changes in the underlying market.
- The “core-adjacency-redefine” methodology should be followed and reviewed on an on-going basis.
- Management must perform the difficult balancing act of ensuring they are constantly striving to grow and reach full potential within the core, looking for new adjacencies which strengthen and leverage the core and being alert and ready for the possibility of redefining the core.
Reach full potential in the core
- Define the core boundaries
- Strengthen core differentiation at the customer
- Drive for superior cost economics
- Mine full potential operating profit from the core
- Discourage competitive investment in the core
Grow through adjacencies
- Protect and extend strengths
- Expand into related adjacencies
- Push the core boundaries out
- Pursue a repeatable growth formula
Evaluate for core definition change
- Pursue profit pools of the future
- Redefine around new and robust differentiation
- Strengthen the operating platform before redefining strategy
- Fully value the power of leadership economics
- Invest heavily in new capabilities
Global Advisors approach to full potential is based on strong practical experience and academic research.
Sources, read more at:
- Zook, C – 2001 – 'Profit From The Core' – Cambridge, M.A. – Harvard Business School Press
- Van den Berg, G; Pietersma, P – 2014 – '25 need-to-know strategy tools' – Harlow – FT Publishing
How to realise Full Potential
Strategic due diligence complements traditional approaches
Traditional due diligence studies are largely backward looking while a strategic due diligence incorporates future uncertainties.
The principal focus of typical legal, financial, and environmental due diligence studies is to evaluate a company's historical actions or to uncover past problems that the buyer does not want to inherit or wants to receive compensation for in return.
Financial and legal due diligences ensure facts and figures representing past performance and the current balance sheet can be relied on – that they are valid, accurate and complete – and that future rights and obligations are accurately represented.
An operational due diligence allows investors to know where to focus in order to unlock value quickly – and impediments to achieving longer-term strategic value. Doing this could sometimes require new / improved management skills and thus it is important to understand capabilities, key people and the organisational culture.
A strategic due diligence is a vital fourth component needed to anticipate the problems that can derail a deal. Strategic due diligence explores whether the business potential uncovered through financial and legal due diligence is realistic.
Typically, the future value of items such as revenue growth, gross margin improvement, cost synergies, and balance sheet efficiencies dwarfs the cost of settling any outstanding legal claim or resolving an environmental problem.
Global Advisors performs differentiated value-adding due diligence.
Recent and current projects include:
- European, South African, West African and South-East Asian clients
- Food, agricultural and renewable energy markets
Global Advisors has partnered for:
- Market and candidate prioritisation
- strategic due diligence
- deal structuring
- drafting of term sheets and definitive agreements
- negotiation assistance
- anti-trust authority submission support and
- post-deal strategy and implementation support.
Global Advisors performs due diligence work across industries and countries
European investment in a South African animal feeds business
- European food producer
- South African animal feeds business
- Comprehensive DD with evaluation of SA animal feeds market, competitive position, full economic modeling including activity-based costing and valuation for a number of scenarios
- Deal structuring and negotiation assistance
- Term sheet, deal document preparation assistance
- Debt raise assistance
- Anti-trust approval support
- Day 1 to 100 support
West African renewable energy
- West African renewable energy build, asset manage and operate
- Multi-country focus
- Evaluation of track record and capability as predictor of future
- Customer interviews
- Market segmentation and sizing with growth projections
- Economic modeling
- Dollar-based return requirement with forex uncertainty analysis
- Valuation with value driver analysis
- Recommendation changes to investment thesis, deal structure and term sheet
South-East Asian renewable energy
- South-East Asian renewable energy build, asset manage and operate
- Multi-country focus
- Major market stage changes with requirement for scenario analysis
- Customer engagement
- Sales pipeline analysis
- Economic modelling with value driver analysis
- Substantial engagement with technical DD team on fundamental parameter assumption ranges
- Recommendations on deal structure changes to mitigate uncertainties
Your due diligence is probably wrong
As many as 70 – 90% of deals fail to create value for acquirers. The majority of these deals were the subject of commercial or strategic due diligences (DDs). Many DDs are rubber stamps – designed to motivate an investment to shareholders. Yet the requirements for a value-adding DD go beyond this….
Join our due diligence team
We hire and grow amazing people
Our due diligence team is trained in our value-adding strategic due diligence approach. Recent graduates typically first learn through exposure to traditional strategy projects. Team members are deployed on high-intensity projects across industries and geographies.
We would like to hear from you if you are interested in becoming part of the Global Advisors Due Diligence team.
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