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M&A Diligence for a Global Leader in Crystals and Jewelry
Interested in purchasing a company in China, this Global Crystals and Jewelry company asked HGR to carry out a comprehensive financial due diligence to ensure all the assumptions were met before finalizing the deal.
Client:
World Leader in the Crystals and Jewelry Industry
Action:
Our team carried out a comprehensive financial due diligence on the target company to check all the assumptions that the Client had made about the deal. We analysed and validated all the financial, commercial, operational, and strategic assumptions, and investigated the target company's past trading activities to ensure there were no 'black holes.' We discovered the plant was making losses and had contingent liabilities exceeding USD6 million due to unpaid taxes and non-remittance of social insurance and housing fund payments, plus accrued land-tax penalties and under-age workers. Based on our findings, the Client decided against pursuing a potentially ill-fated acquisition.
Task/Facts:
In order to increase production and reduce costs, the Client wanted to establish a crystal manufacturing plant in China. One of the options considered was to acquire a China plant that manufactured the unique chemical crystal the Client uses for the majority of its products. The asking price for the China plant was USD10 million. The Client appointed us to undertake a financial due diligence audit on the target company and plant to ascertain if this was a fair asking price.
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