When acquiring a company, it is essential to carry out an acquisition audit to obtain a complete overview of the target company. This audit helps determine the company's strengths and weaknesses, as well as any risks associated with the transaction. Here are the main audits to be carried out as part of an acquisition.
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Acquisition audits
- Thefinancial auditis the first step in an acquisition. It examines the company's financial statements, income statements, balance sheets and cash flows. The aim is to assess the company's financial health, as well as its potential for growth and profitability.
- Theoperational audit, on the other hand, analyzes the company's operations, organizational structure, management, sales and marketing strategy, and production processes. This step is crucial to understanding how the company works, and to identifying any inefficiencies or operational problems.
- Thelegal audit verifies the target company's legal compliance, particularly with regard to intellectual property, patents, contracts, current litigation and legal risks.
- Thesocial audit assesses the human resources situation in the target company. In particular, it examines working conditions, remuneration policy, compliance with social legislation, staff turnover, etc.
Adding value to the company
The final step in the various acquisition audits is the company valuation, which determines the price of the company to be acquired, based on its profitability, assets, growth prospects, sector of activity, competition, etc.
There are a number of valuation methods, such as the multiples method, the discounted cash flow method, the asset-based method, the adjusted net asset value method, and so on.
The choice of valuation method will depend on the specific characteristics of each company, as identified during the acquisition audits. A good valuation of the company will enable you to negotiate the purchase price appropriately, and to anticipate the potential risks associated with the acquisition.
XVAL specializes in business valuation and can support you in this key stage of your acquisition. To request a quote :
