Acquisitions: Information Gathering

Questions to ask in the event of a business acquisition

Information gathering is a crucial part of the process of a business acquisitions. Collecting both quantitative and qualitative information is necessary in order to be able to assess the interest of the target company and carry out a correct indicative valuation.

In addition, the information forms the basis of a business case. The information can be obtained both in writing or orally during a meeting with the target company. If the target company has initiated a broad sales process with the help of advisers or corporate brokers, an information material, also called an information memorandum, is usually obtained that describes the target company in detail. Below are examples of questions that can be asked to the target company. However, it is important that the information requested is adapted to the specific company - it is therefore not possible to start from a generic list of questions and the questions below should therefore be seen as a basis and not a ready-made list of questions.

Financial information

1. Historical Financial Statements (last 2-5 years)
   • Income statement
   • Balance Sheet
   • Cash Flow Statement
   • Information on any extraordinary or non-marketable costs and revenues
   • Information on future investment needs
2. Forecasts and Budgets
   • Future revenue and expense projections
   • Cash Flow Forecasts
3. Key figures
   • Revenue and profitability distribution between business lines, brands, etc.
   • Relevant KPIs for the specific target company and industry. The key metrics that are relevant vary between companies and industries.

Operational Information

1. Business model and revenue streams
   • How does the company generate its revenue?
   • What are the main revenue streams?
2. Customer and supplier base
   • Largest customers and their share of turnover
   • Geographical distribution of customers
   • Main suppliers and their contract terms
3. Competitive situation
   • Main competitors
   • Market Share
4. Product and service offering
   • Overview of current products and services
   • R&D and future launches
5. Production
   • Production facilities and capacity
   • Production processes and efficiency
   • Main distribution channels
   • Status and value of production facilities and equipment
   • Maintenance needs and future investments

 Strategic information

1. Market position
   • The position of the company in the market
   • Market Trends and Growth Opportunities
   • Main competitors
2. Strategic objectives and plans
   • Long-term strategic objectives and strategy of the company
   • Any expansion or diversification plans
3. Sustainability
   • Investments in sustainability projects and their returns
   • Compliance with environmental rules and standards
   • The company's impact on the environment and strategies to reduce this impact

Legal information

1. Company structure and ownership
   • Organizational structure
   • Ownership structure
2. Agreements and commitments
   • Information on Significant Agreements
3. Intellectual property rights
   • Information about any patents, trademarks, copyrights

HR and Culture

1. Personnel structure and competence
   • Number of employees, their roles and key personnel
   • Competence level and need for key competences
2. Work environment and company culture
   • Corporate culture and work environment
   • Employee turnover and employee satisfaction

IT and tech

1. IT systems and technology
   • Current IT infrastructure and its condition
   • Ongoing or planned IT investments
   • Information on IT development, maintenance and support

Other information

1. Disputes and Legal Matters
   • Ongoing or potential litigation
   • Regulatory Risks

‍Collecting and analyzing this information gives a good picture of the target company and creates a basis for a business case and valuation. It makes it possible to evaluate the specific acquisition opportunity but also the opportunity to identify potential problem areas and assess the future growth potential and profitability of the company. The amount of information received varies between companies and industries, depending on the effort involved in producing the information and whether there is sensitive information that the seller does not want to disclose at an early stage.

‍At FLB Partners, we offer expertise and support throughout the acquisition process, from strategic planning to integration. Contact us today to discuss how we can help your company with the acquisition process.