| Go Beyond the
Accounting Numbers What are
Due Diligence Studies?
Why ask NMM to Help in Due Diligence?
Is a Due Diligence Study Right For You?
Case Study
What are Due
Diligence Studies?
Sure the target company has a customer list – all companies do – but how
good is the list? How committed are the
customers? How many are ex-customers that
have simply not been cleaned off the list? Are
they happy with the target company?
NMM performs Due Diligence studies to look at these questions on behalf of clients that
are considering merging or acquiring other companies.
It's amazing how much time and money are spent going over accounting and financial
records, and how little attention is paid to what is really any company's major asset
– its customer base.
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Why
Ask NMM to Help in Due Diligence?
Due Diligence studies can be done under the general rubric of customer satisfaction
studies, because that's essentially what they are. How
satisfied are the company's customers, how likely are they to continue doing business with
the target company, and how do these compare with the norms we've developed from similar
studies?
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Is a Due Diligence Study Right for You?
Ø
If you are selling a company – A
Due Diligence Study can demonstrate your commitment to customer satisfaction and the
solidity of your customer base, enhancing the value of your business. At the worst, it can pinpoint problems you can
address in your customer relationships.
Ø
If you are buying a company – A
Due Diligence Study can uncover any potential problems with a company's customer base
– outstanding complaints, unresolved issues, likelihood to continue doing business in
the future – things you can't pick up no matter how much time you spend going over
the financials..
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Case Study
The buyer was a large, publicly held transportation company that was
national in theory, but very weak in one particular region of the country. The seller was a small, privately held company
that was a major competitor in the region where the buyer was weak.
NMM conducted a Due Diligence Study in the transportation industry and found that, for
a variety of reasons, 20% of those who had done business with the regional company in the
previous year did not intend to continue doing business with them in the future. Some of it was because of general industry
conditions, some because of actions (or inactions) of the company, but the effect was the
same. The acquiring company used the research
to negotiate a better buying price.
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