Transaction Due Diligence

Our philosophy is to help our client maximize the return from their deals. We offer a globally consistent, controlled deal process that helps you to minimize the risks associated with acquiring or selling a business, entering an alliance or raising capital. We provide customized due diligence services and works in combination with PwC specialists including financial, commercial, legal, tax, operational and human resources to cover off on a comprehensive due diligence to help you identify and mitigate the risks associated with each deal and to help you achieve the overriding objective for every deal: maximize the value of your deals.

Our services:

Vendor assistance / sell side (non-vendor due diligence)

Our vendor assistance specialists can advise potential vendors about the type and the extent of information to be provided to potential buyers, as well as assisting vendors with information preparation and management interviews. Our people are experienced in working alongside vendors' management and lead advisers throughout the process to ensure the opportunities and potential issues are understood, and corrective steps taken where possible.

In addition, PwC adds value by affording vendors greater control over the entire sales process, and even potentially securing a higher sales price for the business by identifying and assisting vendors with addressing, to the satisfaction of both transacting parties, any potential concerns and issues which may be picked up by the most demanding of purchasers. All in all, for vendors contemplating sales of their own business, PwC's vendor assistance services provide bespoke solutions to successfully complete the divestments.

The challenges you face

  • Your company’s strategy involves disposing part of the business, whether through a carve-out of business units, or the sale of existing entities

  • Your company is in the process of restructuring or refocusing its activities

  • You want to reposition your portfolio focus on core businesses, or return value to shareholders

  • You’ve started to feel pressure from financiers as a result of deteriorating financial ratios.

How PwC can help

  • Provide vendors with greater control over the sale process and the timing of sale, which can help secure a higher price for your business

  • Provide purchasers with greater certainty over the nature of the business and the characteristics of its cash flow, which helps pricing decisions and the level of gearing the structure will support

  • Reduce disruption to your business as the sale process is more controlled

  • Help add credibility to the facts, figures and information provided in the sales memorandum

  • Vendor assistance specialists can ensure that the vendor timely retains the initiative throughout the sale process

  • Early identification of value critical issues, providing options to "regroup and fix" outside the glare of publicity

  • Rapid execution of divestments from the point of announcement, which reduces business disruption and accelerates the transfer to new owner

Structuring / sales and purchase agreements

A number of different considerations can influence the optimal structure for a deal, which requires a balance between the objectives for the deal and accounting, tax, regulatory and commercial considerations. Our dedicated structuring specialists assist with marshalling a complex range of factors including tax, legal, accounting and regulatory issues that will need to be considered together and advise on designing the optimal deal structure and how it will affect the transaction.

In any transaction, the sale and purchase agreement (SPA) represents the outcome of key commercial and pricing negotiations. Purchasers and sellers are becoming increasingly sophisticated in seeking to exploit the potential value to be gained through the negotiation and execution of the SPA. Our dedicated SPA team provides expert support at all stages of a transaction from pre-deal work through to post-completion support.

The challenges you face

  • You’re considering acquiring or disposing a business and looking for the optimal tax structure.

  • You’re making an acquisition and wish to ensure potential 'debt-like' items and other financial risks have been identified and appropriately addressed, either by way of a reduction in consideration, through a completion pricing mechanism within the SPA, or through warranties and indemnities.

  • The transaction being contemplated includes a post-completion pricing mechanism. You are seeking to position the SPA to your advantage and to minimise the opposing party's potential to manipulate price.

  • You are contemplating the disposal of a business and wish to consider the relative merits of a 'locked box' and other completion mechanisms in the context of your transaction.

How PwC can help

  • We help clients to identify the principal concerns that will determine the right structure for a transaction.

  • We create a feasibility plan to assess the chosen structure and once this is confirmed as the right choice we will provide continuous support throughout implementation.

  • We can work with you and your due diligence team to assist you in mitigating the risks identified during the due diligence phase.

  • We can advise you in your negotiations of the accounting aspects of the SPA. Such advice would include commentary on the pricing mechanism, relevant representations and warranties, any other accounting related clauses of the SPA and any dispute resolution mechanisms related to the purchase price adjustment.

  • We can advise you in your analysis of the working capital requirements of the Business with a view to you determining the normalized working capital for the purposes of your negotiation of the SPA.

  • We can advise you in your determination of the appropriate financial benchmarks (or appropriate adjustments to price in the case of a 'locked box' (fixed price) mechanism) and related arguments, for the purposes of price negotiation and drafting the SPA.

Buy-side due diligence

We help acquirers understand and analyse the financial, commercial, operational and strategic assumptions underpinning each deal. Our in-depth reviews seek to uncover the reality of historical data in order to allow you to form a view of the prospects of the target company. We also help you to use the due diligence findings to their full advantage during the deal, from pricing and valuation through to agreement negotiation. After a deal closes, we can advise on how to improve the internal controls governing the target's financial, IT, back office, and front office management systems and processes.

The challenges you face

  • You want to strengthen your company's core business by acquiring rival or complementary products

  • You want to purchase a company to gain access to its existing products in new markets, or to increase your customer base

How PwC can help

  • By enhancing your understanding of the target business and therefore increasing the likelihood of the deal achieving its objectives

  • By helping you to identify and understand critical success factors so that informed acquisition decisions can be made

  • By highlighting underlying strengths of the target company that can be built upon or hidden weaknesses "black holes" that should be resolved

  • By identifying key deal issues (KDIs) of the target company that can assist you in price negotiation, devising appropriate protection clauses in the contract and early identification of post-deal integration issues.

Bid support and defence

Life in the public equity markets can be tough, sometimes requiring robust tactics to either make or defend a hostile tender offer. For both bidders and defenders, a hostile bid requires a thorough review of the vulnerabilities of a particular business. The bidder and defender will come under intense scrutiny during the bidding process. That scrutiny will focus particular attention on the management teams of both sides. They have to ensure they position themselves well in the eyes of the market during the tender offer. Companies are advised to rely on those with experience of dealing with hostile tender offers, mounting a robust defense and ensuring an optimal outcome is achieved for shareholders.

The challenges you face

  • You’re concerned about your vulnerability to a hostile bid. There may be a number of reasons for a business to feel that it’s open to a possible hostile takeover. Its industry might be experiencing a periodic downturn, there may be a problem with management succession, or there may be market criticism of your company’s performance.

  • You’re looking to acquire a public target in the coming months.

How PwC can help

  • We can help companies to examine the substance behind their fears by carrying out a "dummy" defence bid that will identify issues that from an external point of view may give rise to a bid.

  • For companies making hostile public bids, we prepare reviews on the bidder’s own business and analysis of the vulnerability of the target.

  • For companies defending a hostile public bid, our review helps the company’s management team to position itself well in the eyes of the markets during the bid.

  • We provide financial due diligence analysis to validate the financial, commercial, operational and strategic assumptions underpinning the deal.

Vendor due diligence

When a company is up for sale, whether as a whole or just parts of its operations, it needs to show an in-depth report on its financial health to potential buyers. The process covering the review and analytical work for the report is known as vendor due diligence. The report provides vendors with greater control over the sale process and the timing of sale, which can, in turn, help secure a higher price for the business.

The goal of vendor due diligence is to present in detail the historical financial and operational performance and future prospects of the business being sold, thereby allowing potential buyers to understand and assess its financial health and operational efficiency with confidence. Vendor due diligence also aims to address any concerns and issues that may be relevant to even the most demanding of purchaser.

The challenges you face

  • Your company’s strategy involves disposing of part of the business, whether through a carve-out of business units, or by the sale of existing entities

  • Your company is in the process of restructuring or refocusing its activities

  • You want to reposition your portfolio focus on core businesses, or return value to shareholders

  • You have started to feel pressure from financiers as a result of deteriorating financial ratios

How PwC can help

  • Provide vendors with greater control over the sale process and the timing of sale, which can help secure a higher price for your business

  • Provide purchasers with greater certainty over the nature of the business and the characteristics of its cash flow, which helps pricing decisions and the level of gearing the structure will support

  • Reduce disruption to your business as the sale process is more controlled

  • Help add credibility to the facts, figures and information provided in the sales memorandum

  • Vendor assistance specialists can ensure that the vendor timely retains the initiative throughout the sale process

  • Early identification of value critical issues, providing options to "regroup and fix" outside the glare of publicity

  • Reduce uncertainty risk for finance buyers, potentially justifying higher offers.

Contact us

Kenneth Liu

Kenneth Liu

Partner, PwC Taiwan

Tel: +886 2 27296666, x25831

Lily Wong

Lily Wong

Partner, PwC Taiwan

Tel: +886 2 27296666, x26703

Serena Hong

Serena Hong

Managing Director, PwC Taiwan

Tel: +886 2 27296666, x25991

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