How is it working on the transaction diligence team in the strategy and transaction department?

Hi, thank you for your question!

Transaction diligence in a nutshell involves performing due diligence (DD) on a business to provide information to a decision maker ahead of a decision being made about said business, such as a sale or a refinancing. DD is sort of like an investigation into the information presented by the business, and we present our findings in a report. Anything that comes up in the "investigation", such as any red flags, would be included in the DD report. A decision maker, such as a private equity firm looking to buy the business, would then use the DD report to better inform themselves ahead of making an offer.

That is a simplified overview, as in reality there are far more specific elements to DD. DD is split into different areas, for example financial due diligence (what I do) focuses on the financial performance of the business, such as looking at their revenue, working capital and cash flows. Tax due diligence investigates the tax compliance of a business, and may identify potential tax exposures. There are other forms of DD too, such as technology due diligence and consumer due diligence.

Working in transaction diligence therefore involves the production of due diligence reports. From the financial side where I work, this typically starts with receiving access to management data such as management accounts, stock listings, sales data etc. We then put this together into a databook in excel, where we present this information to be included in our final report, and produce analysis to guide our conclusions, such as looking at working capital KPIs over time or using data analytics on sales data. We tend to communicate with management at regular intervals to ask questions about anything that comes up in our analysis that we need clarification on. Finally, we produce a report to present our findings to the client, in which we go through the different areas of the business such as revenue or cash flows, and discuss our findings.

This process differs from client to client, and there are also multiple types of DD report which we can produce. If a business wants to sell, they may ask us to produce a sell-side, or vendor due diligence report (VDD), which they can give to potential investors. This type of report is usually a longer process, and as our client is the business itself, we have good access to management for questions. On the other hand, we may work for a potential buyer on a buy-side due diligence report, where our access to management is more limited and we tend to have a much shorter timeline. These are the two main forms of financial due diligence, but we also may produce shorter reports such as a seller information document (SID) or a red flag report (RFR). A reports are also not the same every time, with differing levels of scope.

I've worked for many different clients, across completely different sectors on both buy and sell-side engagements, so there is a lot of variety in what we do. I think as no two projects are the same, it is quite fresh every time, but the core skills of a TD professional are applicable to all types of project, so you do get better with each one and it isn't like you are back to square one every time you start a new project.

I hope this answer helps, please reply below if you have any more questions! :)