1．Flexibility through multi-functional services
When many Japanese companies just started utilizing M&A, there was a general trend to hire outside professionals for all deals irrespective of size or complexity, due to the lack of M&A experience and know-how. As Japanese companies have become more accustomed to M&A, they have gradually accumulated the necessary knowledge and know-how and some have started to develop internal capabilities to handle parts of the M&A process in order to make effective investment decisions and reduce costs. Under the current environment, the key to a successful M&A transaction is to complete an efficient M&A process by utilizing outside professional capabilities on a selective basis. G-FAS is capable of providing services that cater to the individual needs of the client including not only comprehensive advisory service from start to finish, but also individual valuations, due diligence, forming acquisition structures, contract negotiations and documentation, and fees corresponding to the work that is provided. For small to medium cap deals in particular, hiring a financial advisor as well as several external professionals for financial and tax due diligence at the same time may be insufficient. The range of services provided by G-FAS allows flexibility for clients in selecting the necessary advisory service(s) they need in addition to due diligence, such as structuring and valuation, in an efficient manner.
2．Due diligence which satisfies the wide-ranging needs of the client
G-FAS’s core due diligence service is not limited to the traditional scope of due diligence which reviews the balance sheet and income statements, but includes a thorough investigation of the actual situation of the target business, and a “Businessman’s Review” which involves flushing out the various investment risks of the transaction. By taking this approach, not only are we able to identify financial issues and/or provide information needed for negotiating the purchase price and transaction terms, we can analyze the risks related to post-transaction business operations and the impairment risks of intangible assets and goodwill both of which are important in making the decision. G-FAS is capable of providing a comprehensive due diligence investigation which responds to a wide range of client needs not just in terms of the financial aspects of the transaction. Such all-inclusive due diligence will prove to be useful where recognizable intangible assets are valuated in the PPA process after an acquisition. Requesting the due diligence team to also conduct the PPA may be beneficial to gain prior understanding of any post-transaction impact and reduce external professional costs.
3．Extensive practical experience and know-how of using due diligence to create solutions
The important goal of due diligence is to collect and analyze information in order to flush out any risks associated with the M&A transaction. However, it is not enough to simply report the material findings of the due diligence, as these are not in themsenves sufficient for making the final decision regarding the acquisition. Based on the facts identified during the due diligence, it is important to reevaluate the target from an overall perspective on both quantitative and qualitative levels, such as whether the risks will make a material impact on the decision to acquire and what kind of measures should be taken to mitigate or avoid the risks even if they are not as serious as passing up the acquisition. We have seen cases where companies lose precious acquisition opportunities as a result of a single issue which may constitute an extensive level of risk but which was overemphasized. The key is to provide solutions that will enable the client to achieve the original goal of the acquisition, such as proposing creative structures that enable the client to circumvent the issues or agree on a new post-acquisition arrangement. The extensive M&A experience and know-how of G-FAS professionals accumulated over the years allows the firm to propose creative solutions which cannot be achieved from standard due diligence services.
4．Cross-border M&A capabilities
The number of outbound cross-border M&A deals by Japanese companies is expected to increase dramatically in the next few years. Even in the case of domestic deals, the majority of the targets in general own overseas subsidiaries. By co-working with the Big 4 auditing firms and the top 20 global mid-scale auditing firms, we access local professionals who are well-versed in the local business practices, accounting, tax and laws in order to provide information for our clients. G-FAS places particular emphasis on maintaining a “locally-oriented” approach especially in cross-border M&A situations. There are cases where large auditing firms explain the due diligence results to their clients by reading a report compiled by the local team and translated by the Japanese team who did not participate in the local review. In such a case, it would be difficult for the Japanese representative to relay the actual feel or impression of the local situation when asked a question by the client. By making sure that our professionals, subject to the prior consent of the client, participate in the local onsite investigation, G-FAS is able to provide clients with live and timely information collected “on location” by the Japanese officer in order to ensure the company receives the important information conducive to efficient and timely decision-making.
