Detailed Scope of work and Our Approach and Methodology
Commercial Due Diligence
Commercial due diligence reviews
the company’s historical and
forecast performance from the
perspective of its markets, its
customers, its competitors and its
internal capabilities. It therefore
provides the investor with a
detailed, objective and fact-based
review of the Target's strategic
risks and opportunities, as well as
a quantitative assessment of the
growth projections used as a
basis for the transaction.
Typically a commercial due diligence would cover the following:
• Market Demand: A verification of market growth level in specific products and services with respect to
market demand.
• Analysis of Competitive Environment to assess the level of competition in the market with respect to
specific products and services.
• Historical Trading Performance: To understand the drivers of historical trading performance of business like
market changes, regulatory changes etc.
• Key Customers Analysis: To analyze the strength of relationship of business with key customers by referring
to high valued clients.
• Achievability of forecasts: Conclusion on the achievability of forecasts and projections with
recommendation on adjustments to be made to improve the results.
Some of the key areas of major assignments/projects to be covered, in addition to the points mention on
previous page, are as follows:
• We will undertake a high level desktop study of the key projects in order to assess the overall performance
of the portfolio of works and to identify projects that may required further investigation.
• For the sample clients / projects identified for a more detailed review we will complete the following:
• Review how projects risks are assessed, managed and tracked and how contingency is developed and
managed
• Other review criteria include procurement, assignments/projects timeline, contractual requirements and risk
assessment and delays/penalties.
• Check that billing has been made in accordance with the contract
• Review transaction variation (status and processes), claims and unconfirmed claim (client and
subcontractors)
• Review the how budget costs and progress is measured and reported
• Undertake a review of the planned vs. actual cost and schedule
• Understand the reasons for variances and any patterns over various projects
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Detailed Scope of work and Our Approach and Methodology

Commercial Due Diligence

Key Considerations for the Commercial Due Diligence:

• Animal feed types/prices/volumes offered by Company vs. competitors

• Analysis of Saudi animal feed competitive landscape by relative market share / quality / end-users catered

• Analysis of short term and medium term demand drivers in the Saudi animal feed market and the expected effects on the evolution of prices and
volumes

• Analysis of impact of subsidy removal on volumes and prices

• Expected additional changes in regulatory environment (if any)

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Detailed Scope of work and Our Approach and Methodology

Operational Due Diligence

The objectives of an ODD are to:

• Assess the sustainability of the target’s operations into the future, without additional investment on top of management’s business plan.
• Identify actions and investments needed, not seen or considered by target management, to accelerate value creation moving forward.
• Advise the deal team on the strategic fit of the contemplated transaction.
• As process, ODD should secure buy-in from all stakeholders for the planned change.

How to perform Operational Due Diligence

The more common due diligence types apply a linear approach, whereas ODD is based on an iterative, structured and inductive approach.

Iterative, structured and inductive approach

As an ODD aims to find the optimal value creation solution, and to provide input to the value
creation plan, a more explorative investigation process is required. The best ODD providers
continually develop innovative, impactful and actionable insights. These are comprehensive,
fact-based, accurate, flexible, creative, and pragmatic.

Insights applies a structured, inductive approach:

1. Agree scope and boundaries

2. Structure value creation plan
3. Prioritize and plan analyses
4. Conduct analyses
5. Synthesize findings
6. Develop recommendations

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