GOING BEYOND TRADITIONAL DUE DILIGENCE: USING DATA ANALYTICS TO GAIN UNIQUE DEAL INSIGHTS

Transcription

1 CPAs & ADVISORS experience drive // GOING BEYOND TRADITIONAL DUE DILIGENCE: USING DATA ANALYTICS TO GAIN UNIQUE DEAL INSIGHTS Presented by Steve Martin & Patrick Gilbert

2 WELCOME Patrick Gilbert Steve Martin 2 // experience drive

3 LIVE TWEET THIS SESSION 3 // experience drive

4 TODAY Discuss the need of the market to Go Beyond Describe data analytics to Go Beneath Share examples & insight gained... so you will never Go Back! 4 // experience drive

5 OBSERVATION Traditional due diligence teams perform financial analysis BUT Savvy investors produce financial analysis 5 // experience drive

6 OBSERVATION In traditional due diligence, financial data is reviewed BUT Savvy investors know system data must be analyzed 6 // experience drive

7 OBSERVATION Traditional due diligence relies on the seller to disclose BUT Savvy investors rely on their diligence to discover 7 // experience drive

8 OBSERVATION Traditional due diligence focuses on accounting risks BUT Savvy investors also focus on economic risks 8 // experience drive

9 The Deal Market Wants 9 // experience drive NOT Clark Kent Compliance

10 CPAs & ADVISORS experience drive //

11 LIVE TWEET THIS SESSION 11 // experience drive

12 Having a deeper understanding of profitability drivers expands the analysis from how high a multiple of existing EBITDA to pay, to how much the acquirer can quickly increase the target s EBITDA... In this way, profit enhancements become a stronger driver of value than changes in multiples. Robert S. Kaplan 12 // experience drive

13 An acquirer needs to take an all-encompassing view of the value that might be created or lost in a prospective transaction. The Boston Consulting Group 13 // experience drive

14 I cannot imagine any condition which would cause a ship to founder. I cannot conceive of any vital disaster happening to this vessel. Captain Edward Smith, Titanic 14 // experience drive

15 QUALITATIVE BUSINESS RISKS DEAL RISKS I cannot conceive of any vital disaster happening to this vessel. Captain Edward Smith, Titanic DECISION LINE QUANTITATIVE RISK MITIGATION VALUE DETERMINATION 15 // experience drive 15 // experience drive

16 HOW DATA ANALYTICS GOES BENEATH 16 // experience drive

17 BECOMING A DATA WONK SQL (Structured Query Language) & relational data base ODBC/Open Data Base Connectivity Data base structure Transaction data: Headers & lines Master data Primary data keys 17 // experience drive

18 Middle Market ERP (Enterprise Resource Planning systems) What is unique/what is not 18 // experience drive

19 UNDERSTANDING THE PLUMBING Sale Order Purchase Order Invoice Bill of Material Routing Steps Customer Master Data Vendor Master Data Item Master Data 19 // experience drive

20 LIVE TWEET THIS SESSION 20 // experience drive

21 Balancing act Baseline period/historical period Building the cube Data warehousing on the fly 21 // experience drive

22 Building the financial model Defining economic relationships Throughput (material) margin Contribution margin Gross margin Operating margin Carve out considerations 22 // experience drive

23 COST FLOW DIAGRAM 23 // experience drive

24 Predictive analytics Turning data into information Concluding on the RED Xs 24 // experience drive

25 LIVE TWEET THIS SESSION 25 // experience drive

26 If you are going to find treasure in the trash sometimes you have to dumpster dive 26 // experience drive

27 CORPORATE CARVEOUT 27 // experience drive

28 Just because something can be stuffed doesn t mean you want it to be 28 // experience drive

29 CHANNEL STUFFING 29 // experience drive

30 CHANNEL STUFFING 30 // experience drive

31 Learning to Walk Before You Can Run 31 // experience drive

32 CONTRIBUTION MARGIN / EBITDA WALK 32 // experience drive

33 QUESTIONS? BKD, LLP Transaction Services Delivering Unmatched Insights to the Middle & Lower Middle Markets Patrick Gilbert Steve Martin 33 // experience drive

34 THANK YOU! LIVE TWEET THIS SESSION FOR MORE INFORMATION // For a complete list of our offices and subsidiaries, visit bkd.com or contact: Steven H. Martin // Managing Director [email protected] // Patrick Gilbert // Senior Managing Consultant [email protected] //