While there may have been a time when financial due diligence was performed ‘in-house,’ it is now almost unheard of for a legal sector transaction not to have external financial due diligence.
Throughout my 25-year career as a financial due diligence provider, I have been conscious of transactions taking place in the legal profession, which always seemed to result in a larger consolidated entity with enhanced capabilities and reach.
As my role over the years became more market-facing, I began to ask the question, who carried out financial due diligence on such transactions, and was there an opportunity we were missing out on in terms of providing our services to the legal sector?
The answer I was often met with, was that these processes were carried out ‘in-house’ and there was little need, or indeed perceived value, in an external provider getting involved. In essence, how could an external due diligence provider add any value?
Part of the reason for the shift to external financial due diligence has been linked to the need to satisfy an external investor or funding party as growth ambitions in the sector accelerated, and the appetite of the private equity and funding community to facilitate this growth becoming more apparent.
However, I would certainly also like to think that, as the partners of law firms began to see the output from a high-quality, externally sourced due diligence exercises, the benefits of engaging with a Transaction Services specialist resonated more clearly.
At Armstrong Watson, we shape our due diligence approach and reporting around your key concerns as a buying party, which might include gaining an understanding of some or all of the following key areas:
External financial due diligence does not fully replace the ‘in-house’ operational due diligence an acquiring firm will carry out in key areas such as management culture and case file quality reviews, but the combined knowledge gained as a result of such joined-up efforts places buyers and financers in a far more informed and confident position in which they can make transactional decisions.
If you would like to learn more about Armstrong Watson’s Financial Due Diligence services, please contact Stephen Green, Head of Financial Due Diligence, or Andy Poole, Corporate Finance Legal Sector Partner, who would be happy to discuss how we might help you on your strategic growth journey.