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Case
-
Reference no. 119-0006-1
Originally published in: 2019
Version: 11-Jan-2019
Length: 9 pages
Data source: Generalised experience

Abstract

The case illustrates the process of financial due diligence, a set of pre-contractual audits that are prerequisites to any M&A transactions. Due diligence is an in-depth investigation used to reduce information symmetries and enlighten potential bidders in a deal. The ultimate goal is to feed information about the target valuation and risks. Though it is not legal audit per se, it uses the same audit techniques. Due to their inherent nature, M&A due diligence reports are highly confidential and never made public. Nevertheless, the case means to mimic actual business practice. It involves fictional individuals and hypothetical descriptions inspired from actual business decisions, adapted to serve as a basis for class discussion. The case links financial statement analysis to auditing. The students will work on extracts from financial data to identify key risk areas, formulate an opinion about the health of the target company, uncover the true face of the firm risk profile and suggest recommendations for further audits. The case underscores the important features of financial due diligence.

Teaching and learning

This item is suitable for postgraduate courses.

Geographical setting

Region:
World/global
Countries:
Canada; France
Locations:
Paris;Montreal

Featured companies

Persepolis
Employees:
11-50
Turnover:
CAD 30,000,000
Type:
Privately held
Industry:
Office equipment, office supplies
Skybridge Advisors
Employees:
2-10
Turnover:
EUR 5,000,000
Type:
Privately held
Industry:
Financial services and banking, consulting

Featured protagonists

  • Henri Lavigne (male), Senior Manager
  • Amin Mazdaki (male), Founder and owner

About

Abstract

The case illustrates the process of financial due diligence, a set of pre-contractual audits that are prerequisites to any M&A transactions. Due diligence is an in-depth investigation used to reduce information symmetries and enlighten potential bidders in a deal. The ultimate goal is to feed information about the target valuation and risks. Though it is not legal audit per se, it uses the same audit techniques. Due to their inherent nature, M&A due diligence reports are highly confidential and never made public. Nevertheless, the case means to mimic actual business practice. It involves fictional individuals and hypothetical descriptions inspired from actual business decisions, adapted to serve as a basis for class discussion. The case links financial statement analysis to auditing. The students will work on extracts from financial data to identify key risk areas, formulate an opinion about the health of the target company, uncover the true face of the firm risk profile and suggest recommendations for further audits. The case underscores the important features of financial due diligence.

Teaching and learning

This item is suitable for postgraduate courses.

Settings

Geographical setting

Region:
World/global
Countries:
Canada; France
Locations:
Paris;Montreal

Featured companies

Persepolis
Employees:
11-50
Turnover:
CAD 30,000,000
Type:
Privately held
Industry:
Office equipment, office supplies
Skybridge Advisors
Employees:
2-10
Turnover:
EUR 5,000,000
Type:
Privately held
Industry:
Financial services and banking, consulting

Featured protagonists

  • Henri Lavigne (male), Senior Manager
  • Amin Mazdaki (male), Founder and owner

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