Operation due diligence to evaluate the probability of implementation of strategic return targets

How do you determine what the potential is to achieve the return target company?

How do buyers of a target company form an additional safety net so they can be sure whether or not operational irregularities exist and whether the organisation will be able to implement the buyer’s strategic return goals?

Objective evaluation of operational structures as a goal!

Objective evaluation of the operating model with regard to performance, effectiveness, innovation and any risk to the target company. In particular the recognition of any irregularities in teamwork efficiency capabilities for the buyer.

Approach: Evaluation of the organization’s value proposition

Through the consistent application of our TOM Quick Fix and Functional Analysis Suite, we are able to quickly and objectively provide valuation reports on the operational and organisational circumstances of target companies for investors in the PE and hedge fund environment. Also in family offices, with valuation reports on the operational and organisational assets of target companies.

In addition to organisational structure and employee skills, the flexibility, in particular willingness to change, operating units achievement and collaboration with each other can be measured by their strength and evaluated in the strategic goals of the buyer. In our estimate, we calculate degrees of progression for ultimate performance of the target company and determine the risk as well as the necessary risk reduction measures necessary to ensure effective service of the organisational system. We evaluate the effectiveness of the organisation: the leadership spans/SoC, the processes and workflows, the leadership organisation in decision-making and recognition between top and middle management, the hierarchical, agile, functional, matrix or cross-functional nature of the cooperation model, strategic planning, integrated financial planning, controlling, KPI control system, supply chain management, sales, operations, and development performance.

At the same time, we evaluate the skills of managers and key employees, their leadership qualities, conformity with quality requirements, the growth of joint values, responsibility and recognition of the company including the willingness to change.

With the help of key figures of equal movement, we check the flexibility, and possibilities for work unification and awareness of synergies between target and buyer organisations.

With perception and due diligence, we check that corporate possibilities and the values of both companies are compatible. The behaviour of managers and employees should be visible on a daily basis.

Three success factors

Identification and evaluation of performance, willingness to change as well as mitigable and non-mitigable exposure for company simplicity, aptitude, market direction, clarity, power and responsibility, SoC and flexibility, collaboration within the system, information and communication channels as well as leadership.