This is something I get asked a lot: Most people have heard of mergers and acquisitions but have no idea about our role is in the process.
In simple terms our job is to investigate the target company of a potential acquisition. We analyse the company in order to assess its ongoing financial viability and identify any possible risks to the business. The general sorts of things that we are investigating (although it varies greatly from job to job) are:
- Is the company profit making, with a healthy balance sheet and a positive cash flow?
- Are the company’s projections of future profits reasonable: are they in line with historical trends? Were historical profits influenced by large one off items which are unlikely to be repeated? Have they lost any big contracts recently?
- Are there any risks to the company which we can identify: have the owners underfunded investment in the company, in anticipation of selling up? Are the company overly dependent on a small number of key customers/suppliers? Are they owed a lot of money from a company which is struggling to pay its debts?
Every company is different, meaning every assignment is different making this not just a vital part of any transaction but also a fascinating place to work.
I’m a recent university graduate, in my first year working in the Transaction Services team in Leeds. In this blog I’ll let you know about my experience in the Deloitte grad scheme, and give you tips to help with your application. Feel free to post any questions in the comments section below.