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Transaction services
Achieve your strategic goals and make informed M&A decisions.
Financial, commercial and operational insight to maximise deal value
The PwC Transaction services team helps clients to achieve their strategic goals and to make informed M&A decisions.
We guide our clients through various transactions which may result in either an acquisition, disposal or stock exchange listing.
We are the largest dedicated due diligence team in New Zealand and have specialists located in Auckland and Wellington servicing a wide range of clients across various industries.
The team works in combination with other PwC specialists including:
- Corporate finance and valuations
- Tax M&A team
- IT, Operational, HR due diligence specialists
- Financial due diligence and other M&A specialists in Australia and around the world
- Industry experts drawn from the New Zealand firm and/or overseas PwC firms.
Through our collective experience, we are involved in more deals than any other organisation in New Zealand. The team’s focus is on meeting the challenges that arise in a fluid business environment and solving the key complex issues that surround deals.
How we can help
Our team of specialists offers a fully-integrated due diligence approach, and with the resources of more than 6,000 people globally, we have the ability to provide companies with complete international coverage.
We are uniquely positioned to focus on the longer-term return from each deal because our services span the entire deal spectrum, from acquisition strategy and evaluation, to post-acquisition integration.
Combining these resources with our industry sector knowledge means we can offer you a world class service.
Achieve your strategic goals and make informed M&A decisions
The PwC Transaction services team helps clients to achieve their strategic goals and to make informed M&A decisions.
We guide our clients through various transactions which may result in either an acquisition, disposal or stock exchange listing.
We are the largest dedicated due diligence team in New Zealand and have specialists located in Auckland and Wellington servicing a wide range of clients across various industries.
The team works in combination with other PwC specialists including:
- Corporate finance and valuations
- Tax M&A team
- IT, Operational, HR due diligence specialists
- Financial due diligence and other M&A specialists in Australia and around the world
- Industry experts drawn from the New Zealand firm and/or overseas PwC firms.
Through our collective experience, we are involved in more deals than any other organisation in New Zealand. The team’s focus is on meeting the challenges that arise in a fluid business environment and solving the key complex issues that surround deals.
Our services
Buy-side due diligence
All businesses involved in a buy-side acquisition need to ensure that the financial information they hold is as accurate as possible, not only to prevent paying too much in a buyer's case, but also to ensure that their governance and risk management objectives are met.
- From the buyer’s perspective, the quality of information available about a potential acquisition determines the ultimate success of a transaction. Without ensuring that the financial statements of a business reflect the reality, a deal may deliver less than first impressions suggest.
- To ensure an efficient sales process, vendors need to present their financial information to potential buyers as transparently as possible. An independent assessment provides potential buyers with certainty about the business and the nature of its earnings and cashflows.
- Financial due diligence can help to identify and focus attention on the factors in the business that will be critical to its future success.
Benefits of PwC due diligence
- Enhances the buyer's understanding of the target business, therefore increasing the likelihood of the deal achieving its objectives.
- Helping buyers to identify and understand critical success factors so that informed acquisition decisions can be made.
- Provides purchasers with greater certainty over the nature of the business and the characteristics of its cash flow. This helps pricing decisions and the level of gearing the structure will support.
Recent clients we have assisted with buy side due diligence
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Vendor due diligence
Vendor due diligence ('VDD') is a specialist product, designed to meet the needs of sophisticated buyers, both trade and private equity. A comprehensive and quality VDD report will add value to the vendor through a reduction in transaction risks (to both the vendor and bidders), by ensuring deal momentum is maintained, a logical process to the deal is adopted, key value drivers of the business are clearly communicated, and that value is maximised.
It allows the collation and analysis of information to ensure Management are placed in the best position from which to go forth and sell their business. VDD will ensure your deals are done successfully.
Benefits of PwC Vendor due diligence
- Identify key value issues
Both risks and upsides will be identified early in the process. Risks can be dealt with up-front rather than allowing them to become negotiation points by potential purchasers. PwC also focuses on identifying upsides which enhance value.
- Independent in-depth analysis and interviews
Our in-depth review will cover off issues relevant to all prospective bidders to ensure no surprises arise. Our due diligence procedures and Q&A will also give the management team an opportunity to prepare themselves for management presentations with bidders.
- Limits the involvement of head office and finance personnel
One detailed financial review resulting in greater control of the sale process, a short timetable once the Information Memorandum (IM) hits the market, and reduced disruption to Management.
- Limits the amount of buy-side due diligence
Our VDD product covers the common analysis and requests from trade and private equity purchasers. Specific buy-side due diligence may be required but it should be minimal.
- Allows bidders to put forward their best bids
PwC's detailed approach and brand reputation provides bidders with a high degree of confidence in the information provided.
Recent clients we have assisted with vendor due diligence
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Capital markets
The Transaction Services team has extensive expertise in assisting clients with public debt and equity offerings. We can work together with you through the following phases of issuance:
Evaluation of options
- Advice on the potential capital raising or exit options.
Structuring and planning of offer
- Advice on the tax and financial considerations of the potential offer structures.
- Advice on the financial information requirements for the prospectus, including: audit requirements, prospective financial information requirements, and materiality guidelines.
Due diligence
- Due diligence report on the historical and forecast financial and tax information to be included in the prospectus. Opinion to the Due Diligence Committee on this information.
- Audits of the historical financial statements.
- Attendance at Due Diligence Committee meetings as an observer.
Preparation of prospectus
- Assisting with preparation of financial information in offer document.
Evaluation of options
- Advice on the potential capital raising or exit options.
Structuring and planning of offer
- Advice on the tax and financial considerations of the potential offer structures.
- Advice on the financial information requirements for the prospectus, including: audit requirements, prospective financial information requirements, and materiality guidelines.
Due diligence
- Due diligence report on the historical and forecast financial and tax information to be included in the prospectus. Opinion to the Due Diligence Committee on this information.
- Audits of the historical financial statements.
- Attendance at Due Diligence Committee meetings as an observer.
Preparation of prospectus
- Assisting with preparation of financial information in offer document.
We have been involved with the following IPO processes as the Investigating Accountant:
- Evolve
- Kathmandu
- Ecoya
- Z Energy
- Tegel
- Fonterra
- Vitaco
- Metro Performance Glass
- Airwork
- Investore
- Oceania Healthcare
Other engagements
Our Transaction Services team’s core product is to provide market leading due diligence services with respect to mergers and acquisitions and capital markets transactions. However, we have developed a range of other specialities and products using our key skills of collecting, analysing and reporting information.
Supplier due diligence
During the GFC, our clients became more aware and concerned about the financial stability of their current or potential suppliers or clients.
How we can help
We are able to provide a report focused on indicators of financial instability such as macro-economic factors, leverage, recent cash flow or profit trends, issues with shareholders and credit rating agency reports.
Our report can be prepared using Management information, or through the use of publicly available information.
Union Negotiation
Over the past few years many companies were experiencing increased financial pressure causing them to closely examine their costs. In many instances this meant either restructuring, reducing their work force or undertaking challenging wage negotiations. In New Zealand, employers are legally obliged to consult with employees which often leads to negotiating the terms of employment, or the basis of redundancies with union representatives.
How we can help
The role we have fulfilled has been to bridge the trust and disclosure gap between the employer and the union. We do this by reviewing and summarising financial information on the performance of a business, division or specific site, and verify that the information is robust and accurately reflects the relevant business.
This information is then presented to the union in a form that enables them to understand the business performance issues, but does not reveal commercially sensitive information.
Other services also include:
- Standard Costing Reviews
- CFO Reporting
- Advice on disposal processes
- Verification exercises.
For more information, please contact Ian McLoughlin or Russell Windosr.
Delivering deal value
Commercial due diligence
Any business seeking to make an acquisition needs to understand not only the specific performance of the intended target, but how this relates to projected market conditions and its competition within a specific industry.
- Making an acquisition means considering not only the merits of an individual business, but also the context in which the business operates. Without understanding the unique qualities of the sector a business is in, it is impossible to arrive at a realistic valuation.
- A whole range of factors can influence the competitive state of a market. These include technology, customers, legislation, powerful buyers and the emergence of new geographic markets. Each of these needs to be considered for the impact that they might exert on the future value of an acquisition.
- A potential acquisition may be projecting very high earnings. These need to be validated against data from the market to test their reliability. Equally, earnings projections may be based on the development of new products or markets. These assumptions also need to be assessed against the broader general market.
- PwC’s commercial due diligence services are supported by our dedicated industry expertise and our broad geographical reach. Our understanding of specific markets allows us to assess assumptions and projections and provide efficient, cost-effective services in a timely manner.
Benefits of PwC commercial due diligence
- We have carried out more than 600 commercial due diligence and 150 consulting assignments worldwide. The extent of our global reach means that we can help our clients spot opportunities and advise them on all the relevant factors to help them establish themselves in the appropriate markets.
- We can help assemble the teams and share our in-depth industry and market know-how to identify and address the key issues quickly and cost-efficiently.
- PwC's conclusions are based on well-researched and integrated views on all aspects of the transaction. This translates into a less cumbersome and more efficient due diligence process, meaning your organisation may only have one report rather than two or three. This then saves you time and of course, cost.
- In New Zealand we draw upon Australian and Singapore Commercial Due Diligence based teams to compliment our knowledge of our market.
General HR due diligence
Much of the value realisation in a merger or acquisition depends on the attitudes and behaviour of people involved in the target business. It is therefore important to gather people related information to help evaluate current issues that might diminish the value or impede anticipated value realisation post-deal. In addition to HR relevant information collected in other areas of the due diligence process, this work covers:
- Retention
- HR management
- Culture and values
- Compensation and benefit systems
- HR environment
Benefits of PwC HR due diligence
Depending on access to relevant senior management and key HR information (such as culture or climate surveys) PwC can provide solutions to the important questions such as:
- Retention issues – what is the likelihood that key senior management are at risk of leaving the organisation? Does the organisation have retention issues in relation to staff critical to business operation? What is the typical cost of hiring? Benchmark turnover statistics.
- HR management – do HR policies and procedures generally meet standard legal compliance and provide a sound framework for managing staff?
- Culture and values – How adaptable and resilient is this organisation? Are its staff likely to ‘hit the ground running’ post-deal? Is the culture likely to have a positive or detrimental impact on expected value/benefit realisation of the acquisition? If merging two organisational cultures, how different are they and what are the likely implications?
- Industrial relations environment – What is the current level of unionisation and to what extent is this likely to pose any risks post-deal?
IT due diligence
The heavy reliance on information technology (IT) for business operations, management information and financial reporting in today’s business environment makes IT a priority item in M&A. Not only does IT often count among the largest capital and operational expenditure items, the owners of a business must also find better ways of deriving value and leverage from IT assets.
- Purchasers need confidence that the IT assets supporting the business are up to the task.
- Purchasers need to have a clear view of any IT investment required to maintain the EBIT of the business being purchased and factor these costs into their calculations and negotiations.
- Vendors need to secure the best possible sale price. Identifying and then mitigating or addressing IT issues with transaction relevance reduces purchaser risk which supports a greater sale price.
- Vendors and purchasers both need to minimise the impact of the sale and transition process on business operations.
Benefits of PwC IT due diligence
- Provides buyers with insightful understanding of the cost and impact of system related issues that are relevant to the transaction being considered.
- Identifies opportunities to improve business performance through enhanced IT enablement and cost reduction.
- Provides purchasers with options and strategies for managing the IT related aspects of a transaction to avoid disruption to business operations and reduce risk.
- Identifies IT systems options (and the capital required) for achieving post deal strategies that are being considered during a transaction.
- Provides purchasers with greater certainty that the IT systems supporting the target business are fit for purpose and identifying resources critical to continued business-as-usual operations.
Operational due diligence
Smooth running of the operations are needed to maintain “business-as-usual”. Improvements to the operational efficiency can result in enhanced enterprise value.
Benefits of PwC operational due diligence
- Our team of experienced business operations specialists enables us to provide potential acquirers with a coherent overview of the target’s operations. We cover the full scope of business operations from supply chain and logistics, through to manufacturing and commercial activities.
- We review management structures and controls, provide an assessment of operational effectiveness and benchmark the cost base of a business with similar businesses worldwide.
- Working with management we also identify and quantify opportunities for operational improvement and develop action plans to deliver against these opportunities.
Post merger integration planning
In many ways, a deal starts at completion, as from here, the benefits and value that the deal was designed to deliver need to be realised.
- Deals often fail to deliver the value forecast for them and this can be for a variety of reasons. Often part of the reason lies in the lack of integration between the business and its newly-acquired asset. Delivering the business plan used to justify the acquisition requires considerable resources.
- A transaction represents a significant change to the business, and one that requires careful management if the anticipated benefits are to be realised quickly.
- PwC has extensive experience of helping businesses integrate new acquisitions. Our teams comprise many individuals with ‘in-line’ industry experience.
- We have developed specific tools and techniques that have proved their worth in other transactions. Their early application can save considerable time and money.
Benefits of PwC post merger integration planning
- Our dedicated teams work on-site to help manage the changes that a deal generates in an existing business through kick off meetings, and Day 1 communications.
- We address the immediate concerns of the acquirer over the first 100 days of the acquisition and produce detailed action plans to deliver value from the deal.
- Programme management experts help ensure that you secure value from the deal, as well as implementing KPI / management reporting, cash management, and cost reduction.
- Our broad knowledge of HR issues allows us to give practical advice on employee management addressing "culture" and style differences. We help our clients to navigate through the wide variety of employee programmes used and to help them choose the best programmes to achieve all potential synergies.
Synergy review & assessments
Bolt-on acquisitions generating revenue and cost synergies are becoming an increasing focus of both corporate and private equity M&A activity, providing a potential buyer with a comprehensive advantage over other buyers.
Benefits of PwC synergy review & assessments
Given the importance of synergies in supporting the valuation of a business, we conduct a detailed review of the synergy proposals underpinning the deal. The focus is on achievability, cost to implementation and timing of delivery.
Our team assesses all aspects of synergy delivery including key risks, interdependencies and the probability of their successful achievement.
Working with management we will scope out an implementation plan, which will include a forecast of the actions, costs and profit impact in the months post completion.
The detail and accuracy of the synergy forecast is increased towards completion as data is received. On completion it provides the backbone of the integration plan.
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