A transaction can be strategically sound and financially wrong. Buyers must assess post-closing capital needs, working capital and integration costs.
Due diligence findings must translate into pricing adjustments, warranties, conditions and contractual protection.
Integration begins before closing: governance, reporting, treasury and the first hundred days should be designed while the structure can still be changed.
Checks before an offer
- Make the assumptions linking price, debt and working capital explicit.
- Separate evidence-supported synergies from those still to be delivered.
- Estimate integration costs and post-closing liquidity needs.
- Translate material findings into a decision on price, structure or conditions.
Practical example
Two targets with the same operating margin may require very different capital expenditure and working capital. Comparing acquisition multiples alone can obscure the capital actually needed to operate them.
Illustrative example. The appropriate approach depends on the circumstances of each company.