An overseas manufacturing client was keen to purchase an Australian eastern seaboard manafacturer whom it had known for years. A pre Due Diligence involved reading large files in the office of a major accounting firm.
The accounting firm expressed surprise when asked if our team could visit the Melbourne premises of the business to be acquired.
During the visit we facilitated a Strategic SWOT Analysis. That is on one page, not spread over four pages.
We asked how the strengths could be used to commercialise the opportunities? Then we asked how could the strengths be used to overcome the threats?
Next we asked what could be done to make sure the weaknesses did not spoil the opportunities? Finally, we asked what if the weaknesses combine with the threats, what corrective action should be taken?
We concluded it was a "dog" of a business. Our opinion was that the business was only worth book value - $16m.
Our client thought long and hard and finally decided not to buy.
The answer to the seller was "Thank you but no thank you." A $16m mistake avoided.