TERMS OF REFERENCE FOR A CONTRACTOR TO CONDUCT BUSINESS DUE DILLIGENCE SERVICE
TERMS OF REFERENCE FOR A CONTRACTOR TO CONDUCT BUSINESS DUE DILLIGENCE SERVICES
HIVSA is seeking the services of a company or individual to perform due diligence on a potential financial investment through analysing and validating the financial, commercial, operational and strategic assumptions being made.
1. Scope of work
The due diligence process should cover areas of commercial/ operational, legal and financial due diligence as indicated below:
1.1 Commercial or operational:
• Plant and equipment
• Real estate: property and premises
• Stock and inventory
• Systems and processes (accounting platforms and any other applications in use)
• Employees/ staff (Nature of contracting)
• Customers (to highlight key customers and provide any market segmentation)
• Products and services
• Suppliers
• Business Intellectual property
• Market trends and issues
• Contracts and agreements
1.2 Legal due diligence
• Legal registration status and compliance with relevant laws
• Shareholding in the business
• Organisational structure and key staff
• Claims and warranties
• Patents
• Compliance of existing products/services with industry requirements
• Trademarks and business names
• Tax statutory audits and risks
• Unrealised legal claims/ risks
• Contingent and other potential liabilities
• Transfer of employee entitlements
• Contracts in place and terms thereof
• Vendor warranties and indemnities
1.3 Financial due diligence
• Financial performance over the past three years. Projections for the next three years (to include key assumptions)
• Current (if any) financing facilities and terms thereof
• Debtors (including assessment of the quality of the Debtors books)
• Creditors (including assessing the ageing of such balances)
• Work in progress
• Salaries and wages
• Employee entitlements
• Guarantees and bonds
Pre- payments and insurance
2. Qualifications /competencies of bidder
2.1 5 years or more experience in business and finance
2.2 Track record of similar work with 3 references provided
3. Deliverables
Following the due diligence process, the contractor is required to provide a report that covers the following aspects:
3.1 An assessment of the business. This should include a confirmation of the facts, figures and information provided by the seller.
3.2 A view of the future earnings based on past trading experience.
3.3 Key value drivers
3.4 Inherent risks in the business, including financial risks, and characteristics of the cash flows generated. This section should further include any pending legal or regulatory matters.
3.5 An estimation of the entity’s commercial potential
3.6 Desktop valuation of the business including a general benchmarking with similar type organisations
4. Proposal submission
Interested contractors should submit a proposal to F. Phiri (phirif@hivsa.com) by 18th November 2022. Proposal should indicate the anticipated amount of time to complete the assignment, costs and other relevant assumptions, including an outline of how the due diligence will be conducted, and required documentation to assess the business entity.
For further information relating to the scope of work, please contact Y. Naidoo (naidooy@hivsa.com).