Case study №4 – due diligence of wine producer for a foreign investor

Client

Not long ago we completed a due diligence engagement for a foreign investor (private company based in Romania) looking to acquire a midsized local wine manufacturer and merchant, as part of their European production and distribution network.

Challenge

The client requested a detailed due diligence analysis and report for 3 different potential acquisition targets in the sector. The final reports were meant to be used for decision-making purposes and only one target was to be selected for acquisition. The investment range was EUR 8-17 million.

Approach

We approached all the targets with letters of intent. Our team audited the company’s tax, financial and banking records for the last 5 years. Customer contracts and distribution network were mapped-out in detail and scrutinised. We focused particularly on potential hidden liabilities and available cash balances. The supply chain and manufacturing operations were documented and analysed for deficiencies. Organisational structure, fixed costs and personnel allocation were reviewed for potential acquisition synergies. We carried out several site visits for fixed assets and inventory review and analysis.

Results

The task was completed within 25 business days, in which time we managed to perform all necessary audit procedures and analysis, as well as produce a final report. The client deliverables included market and industry analysis, methodology and performed activities, results and recommendations, as well as multiple schedules and appendices detailing our efforts and quantifying our findings for all 3 targets. Based on our recommendations the investor selected and acquired one of the entities – the deal was prepared and executed under our supervision.