When should you appoint a due diligence accountant?
The best time to appoint a due diligence accountant is prior to signing the Heads of Terms (ie. the agreed outline of the acquisition). It is often beneficial to get your newly appointed due diligence practitioner to review the Heads of Terms prior to signing as often the Heads of Terms as problems regularly occur later in the process due to ambiguous clauses within the Heads of Terms. A good transaction accountant would be able to fix these before it is too late.
Due Diligence Fieldwork
Once agreed, the Heads of Terms should allow two to three months for the acquirer to complete their due diligence.
For a small business the actual work involved in due diligence engagement should take about two weeks but this is always highly dependent upon the target company having the necessary information to hand. Often due diligence accountants will ask for information that requires a bit of time to pull together. For that reason the actual period will often be closer to a month with a slow period at the start before the information is flowing.
After this period the Due Diligence accountant will deliver their report in writing and talk the client through the key issues requiring consideration.
After the due diligence
It’s likely that the due diligence report will raise issues that can be addressed within the Share Purchase Agreement (SPA). Therefore it is likely that you will want to retain the due diligence accountant to help advise on the wording of the SPA and possibly to aid negotiations over any working capital or net debt adjustments up until completion.
HOW CAPRICA ONLINE ACCOUNTANTS CAN HELP
At Caprica Online Accountants we are experienced due diligence practitioners. If you’re making an acquisition we can provide financial and tax due diligence for as little as £999 + VAT. Find out more about our great value due diligence.