How we help our client to buy business with financial due diligence service?

Financial Due diligence

Due diligence helps purchaser to understand the nature of deal, the risk involved and whether the deal fits with their portfolio. Undergoing due diligence is like doing 'homework' on the potential deal and is essential for an informed decision.

Scenario

ABC Sdn. Bhd. (Name changed to protect privacy of the company) was a newly incorporated company in Malaysia in year 2018. The principal activity of the company is the manufacturing of the aircraft tunnel. At the beginning, the Company rented a space from DEF Sdn. Bhd. to run its business. In year 2019, the DEF Sdn. Bhd. made an offer to ABC Sdn. Bhd. to sell their business which includes their land, building and other assets. The offer was aligned with ABC Sdn. Bhd.’s intention to buy land, building and other assets.

Struggles

ABC Sdn. Bhd. was unable to decide which is a better choice:

1) Acquisition of DEF Sdn. Bhd.

2) Buying land, building and other assets

Solution

KTP was engaged by the management team to conduct a financial due diligence on this acquisition which emphasizes on the value of properties, plant and equipment. We started by analyzing the market value of property, plant and equipment, review all the legal documents and transaction involved in the Company. At the end of due diligence, we have gathered all the findings and create a report.

In the report, the following major issues are revealed:

1) Huge related party transactions

2) the loan amount was remained in account

3) Contingent liabilities

4) Other…

After furthers discussion with ABC Sdn. Bhd. management, they decided to buy land, building and other assets.

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Financial Due Diligence is to help investors understand and assess the financial position, uncover unrecorded liabilities, forecast the future cash flow, and help investors for better decision making.

Financial Due Diligence is to help investors understand and assess the financial position, uncover unrecorded liabilities, forecast the future cash flow, and help investors for better decision making.

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