Inclusive Features:

• analyses published record of bidder or potential bidder
• independent analysis of published record of target
• peer group comparative analysis of both predator and target
• advises how findings can best be used in the market
• assesses commercial strengths and weaknesses
• analyses bidder's role in its industry including its acquisitions record and analysis of past and planned strategic move

Pre-deal Evaluation - This is effectively early stage transaction evaluation—at an early-enough stage to influence feasibility, bidding strategy, transaction structure, valuation, and negotiation process. This is more value added than confirmatory due diligence carried out after the deal has been negotiated.
Inclusive Features:

• identifies key value drivers, risks and potential deal breakers
• assesses target's strengths and weaknesses against industry benchmarks
• evaluates potential investment in context of your existing business

Strategic and Commercial Intelligence - Commercial Due Diligence is the investigation, advice, and reporting to the client regarding market and commercial issues which affect the transaction, using a highly advanced toolkit of analysis and investigation techniques, including primary research.
Inclusive Features:

• Industry mapping
• Market mapping
• Competition and benchmarking
• Assessment of strategy
• Operational improvement
• Technology assessment
• Revenue modelling
• Pricing and margins
• Projection sensitivities
• Post transactions priorities
• Exit options
• Management briefing
• Structured management interviews
• Desk research
• Customer interviews
• Industry interviews
• In company diagnostics

Transaction Structuring - Analysis of the current situation and commercial objectives to determine the most favourable accounting and tax treatment of a potential acquisition or divestiture.
Inclusive Features:

• Development of transaction structures that minimise the potential negative effects on reported earnings
• Development of pre-and post-transaction creative tax structuring to help minimise taxes
• Consideration of long term plans (dividend repatriation) or exit strategies (capital gains)
• Dovetailing with banking/security requirements
• Input to financial model
• Structuring of legal agreements to client’s requirements

Contract Assistance - Advice on draft sale and purchase agreements and related issues.
Inclusive Features:

• input to drafting
• structure of any price adjustment mechanism
• scope of warranties and indemnities (e.g., relating to Financial, Tax, Pensions, Environmental and other matters)
• accounting principles and mechanics for closing accounts
• form of any dispute resolution process

Regulatory Reporting - Preparation of documentation with regard to meeting reporting requirements of stock exchanges and other regulatory bodies within the context of a transaction.
Inclusive Features:

• presents financial information in public documents
• keeps all parties fully informed about the company and target
• prepares reports for sponsoring investment bank
• reviews a company's working capital requirements and report publicly on the financial performance

Integration/Separation Services - Advice, design, and management of transaction synergies and implementation both prior to and immediately following a transaction.

Inclusive Features:

• highlights key integration/separation issues during pre-deal evaluation, planning and post-deal implementation
• analyses potential synergies
• designs integration/separation programs
• manages integration/separation project implementation

Transaction Evaluation (Due Diligence) - An investigative analysis of a business, assessing the key issues facing the business and the drivers behind maintainable profits and cash flows. Inclusive Features:

• quality of maintainable earnings: historic and projected
• balance sheet, results, projections
• cash flows
• tax
• people issues
• management information
• systems and controls
• pensions, compensation, benefits
• environmental matters
• financial model build/review

Vendor Assistance - This is a self-standing service to help a corporate or financial vendor prepare a business for sale. As opposed to Vendor-Initiated Due Diligence, the results of the work and advice are for the seller and not the potential buyers. Inclusive Features:

• option reviews
• pre-sale review and planning
• transaction structuring and modelling
• disposal process assistance
• compilation and review of information to be provided to bidders
• assisting with information memoranda
• audit of special purpose accounts
• organisation of data room, and running the data room
• checking/challenging information provided by management of the business to be sold and generally representing the vendor's interests on site
• interfacing with purchasers and their advisers and challenging due diligence findings of purchasers
• advice to vendor on sale and purchase agreement
• separation assistance
• assisting with Stock Exchange and other approvals
• audit/review of completion accounts, assistance with price adjustments as well as work on warranty clauses
• may also involve an independent team providing Vendor Due Diligence with a duty of care to the purchaser

Vendor Initiated Due Diligence - Independent analysis and evaluation of financial, commercial and other information prepared at an early stage of the disposal; essentially, transaction evaluation initiated by the vendor for the sake of potential buyers. Inclusive Features:

• quality of maintainable earnings: historic and projected
• balance sheet, results, projections
• cash flows
• tax
• people issues
• management information
• systems and controls
• pensions, compensation, benefits
• environmental matters
• financial model build/review

Project Due Diligence - Independent analysis and evaluation of financial, commercial and other information on large asset-intensive projects, predominantly when external financing is required.

Inclusive Features:

• commercial analysis of relationships and operations
• market studies
• balance sheet, results, projections
• cash flows
• tax
• people issues
• management information
• systems and controls
• environmental matters

Transaction Modelling - Building of transaction models to support the Valuation or Due Diligence; Review of models prepared by client or third parties. Inclusive Features:

• Building transaction models
• Model reviews
• Business planning and forecasting
• Management reporting solutions
• Process improvement
• Synergy management
• Use for sensitivity analyses and basis for Risk

Securitisation - Services relating to the planning (pre-issuance), execution (issuance), and servicing/reporting (post-issuance) of securitisation products or special purpose vehicles (SPV). Securitisation is a funding option where homogeneous, illiquid assets that produce a stream of cash flows are pooled and claims on those assets are issued in the form of marketable securities or notes. The sale of these notes provides a company with cash flow it receives today instead of cash flow it receives in the future when the payments or revenues from the assets are collected.

Inclusive Features:

• Asset Due Diligence
• Accounting Opinion
• Assurance securitisation
• Financial and Strategic Advice
• Structured Investment Vehicles
• Third Party Processing
• Transaction Processing
• Transportation

Structured Finance Service - Due diligence on complex asset bundles, as opposed to business units.

Inclusive Features:

• Carrying out an initial assessment of the viability of a proposed project to identify the key opportunities and risks of the project (see pre-deal evaluation)
• Performing an initial assessment of the suitability of an acquisition for structured finance through identifying and analysing event risks in the business (see pre-deal evaluation)
• Undertaking focused due diligence to gather the appropriate information to support the key assumptions underpinning the evaluation of the project/business (see transaction evaluation)
• Undertaking research into industry trends and customer intentions to allow an informed evaluation of sensitivities (see strategic and commercial intelligence)
• Preparing/reviewing financial models to properly evaluate the economic drivers of the transaction thereby allowing focused due diligence and reliable sensitivity analysis to be undertaken
• Helping minimise tax leakage and helping maximise distributable reserves by identification of tax efficient structures to minimise international and local tax, successful application for tax clearance and resolution of key tax issues affecting special purpose vehicles (see transaction structuring)
• Allocating liabilities and contingent liabilities to optimise valuation - as part of the transaction evaluation process quantifying liabilities, assessing ownership, identifying key residual tax issues, advising on the basis of allocating pension fund obligations, assessing working capital requirements and sensitivities (see contract assistance)
• Advising on the financial and risk allocation aspects of the contractual arrangements between the special purpose vehicle, the providers of services and the recipient of services (see contract assistance)
• Advising on the appropriateness of financial covenants in the loan/bond documentation by running appropriate sensitivities within the model and helping to ensure that these are properly documented in the contracts (see contract assistance)
• Advising on effective internal procedures to control business risks by benchmarking proposed procedures against best practice, assessing IT strategies and providing guidance on the appropriate systems to help optimise investor/lender reporting

John Kiruthu
Corporate Finance and Transactional Services
Email: johnkiruthu@kpmg.co.ke