contact us on +44 (0)20 7318 5700 16 corporate finance


H.I.G. Europe is the European arm of H.I.G. Capital, a leading global private equity investment firm. We specialise in providing capital (typically from £5m up to £75m) to small and medium-sized companies with attractive growth potential. We also have extensive experience with financial restructurings and operational turnarounds.


For further information please visit www.higeurope.comor contact us on +44 (0)20 7318 5700


H.I.G. Europe is the European arm of H.I.G. Capital, a leading global private equity investment firm. We specialise in providing capital (typically from £5m up to £75m) to small and medium-sized companies with attractive growth potential. We also have extensive experience with financial restructurings and operational turnarounds.


For further information please visit www.higeurope.com or contact us on +44 (0)20 7318 5700


Maximising consideration – the importance of vendor due diligence


The frequent use of vendor due diligence (VDD) in the heady days when buyers were falling over each other on their acquisition trails has long since diminished. However recently there has been increased interest in VDD from vendors as they seek to bring their deal to completion. Baker Tilly south east corporate finance partner, David McCulloch (pictured), comments on some of the benefits


VDD has often been viewed with some cynicism. However, there are some very good reasons for vendors to initiate VDD as it can bring significant benefits including:


• Resolution of issues Potential problems can be identified and addressed early in the transaction process. One recent example saw the vendor undertake a voluntary disclosure to HMRC of a potential employee tax liability and reach a settlement before the VDD report was issued.


• Timescales and confidentiality The VDD report can be prepared in parallel with the Information Memorandum (IM) as much of the information required is the same for both, so reducing a duplication of effort. This can shorten the overall sale process thereby reducing the risks of the buyer changing their mind, potentially damaging market rumours circulating and


VDD is not independent or objective


Whilst the vendor instructs VDD, the final report is addressed only to the successful purchaser with the normal liability resting on the report’s provider


The vendor pays for the VDD irrespective of whether a sale is concluded


VDD is selective in what it presents


uncertainty for employees. If the bidder fails to complete the acquisition, less time is lost in getting another up to speed as they do not need to conduct their own due diligence.


• Less price chipping With full information supplied to all potential purchasers through the VDD report, the scope for the preferred bidder to chip the price is significantly reduced. As all bidders receive the same


Preventing or reducing price chipping can often pay for the VDD costs. The process reduces the risk of a sale not completing


To retain its value, VDD needs to be ”full scope” with no restrictions on access


information, there is less scope for them to include assumptions on which their bids are made, thus assisting comparability of competing bids.


• Commercially sensitive data Vendors may wish to control the release of commercially sensitive data to competitors – this can be edited from the VDD report until late in the sale process.


Albert Goodman CBH celebrates growth


Weymouth-based chartered accountancy firm Albert Goodman CBH has celebrated half a year’s success following its merger with Coyne Butterworth Hardwicke (CBH).


The merger means Albert Goodman CBH is part of one of the largest independent accountancy practices in the south west. As part of a


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prominent and well-respected firm, Albert Goodman CBH clients benefit from access to specialist tax and financial planning advisers from a wide network of offices in Taunton, Yeovil, Bridgwater, Chard and Weston-super-Mare, with staff numbers in excess of 200.


Albert Goodman CBH director, Ian Walton, said: ”We are thrilled to have


merged with Albert Goodman. The vast experience and capabilities of the firm’s 14 partners, as well as its working practices and advanced IT systems, has brought enormous benefits to our Weymouth office and clients.”


More than 150 guests enjoyed a reception held at the Weymouth and Portland National Sailing


Common criticisms


Many are sceptical of the value of VDD, but there are counter- arguments to the common criticisms of the process (see table).


With fewer deal numbers and aggressive price negotiations often appearing late in the sale process, the benefits of VDD are clear for vendors keen to attract the best price.


Details: David McCulloch 07881-578682 david.mcculloch@bakertilly.co.uk www.bakertilly.co.uk


Academy, when David Griffin, Albert Goodman’s managing partner, gave a short speech to welcome guests.


Since the merger, the firm has invested in new internal IT systems, improved efficiency and introduced working practices consistent with the rest of Albert Goodman. The Weymouth office is able to draw upon first-rate expertise from elsewhere in the firm to provide an enhanced service to local clients.


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JUNE 2011


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