Geopolitical risk and market uncertainty have become part of the business landscape. Unpredictable policy shifts, international tensions, and political instability are now major drivers of financial market volatility and investor sentiment. At every stage—from market expansion and product launches to strategic partnerships and digital transformation—businesses are exposed to a range of risks.

Navigating these challenges requires thorough risk assessment and strategic decision-making to sustain growth and remain competitive, especially amid disruptive, unforeseen events. In this context, Mergers & Acquisitions (M&A) emerge as a powerful strategy to mitigate risks and maximize returns. M&A enables businesses to build sustainable, long-term shareholder value by identifying and executing growth opportunities through a structured, forward-looking strategy.

Why Choose Mergers & Acquisitions (M&A)?

Through M&A, companies are able to achieve Accelerated Growth and gain instant access to new geographic markets or customer segments. It also strengthens a company’s market position and gain a competitive advantage, allowing them to gain more market power and increase their market share while strengthening their competitive positioning. M&A also improves a company’s defence strategy by preventing competitions from acquiring key assets or capabilities.

Another benefit M&A can bring to a company is by increasing the diversification of products & revenue streams and allow the company to reduce their reliance on a single revenue stream through the acquisition of complementary businesses.

M&A brings about further benefits to economies of scale and operational synergies through cost savings. Shared operations such as admin, IT, marketing, can lead to economies of scale. Operational efficiency can be achieved by integrating best practices, systems, and technologies that enhance performance across the company.

Lastly, M&A can support companies in their succession planning and exit strategies, should such outcomes arise.

What is Commercial Due Diligence?

Commercial Due Diligence (CDD) is an in-depth analysis of a company’s market position, performance, and growth potential to assess its viability and strategic risks. While commonly used in M&A, CDD also supports decisions on market or product expansion both locally and overseas.

What CDD is

• An exercise to identify any strategic risks, obligations and implications pertaining to the commercial aspects of the target company that will impact its existing and future financial performance.
• It reviews and tests the financial projections against external macroeconomic factors, internal business drivers and strategic growth plans.

What CDD is NOT

• Not an opinion on the viability of the company.
• Not an opinion on the worth/value of the company.
• Provides no assurance on the true & fair view of the historical/forecast financial performance and position of the company.

Comparing Financial Due Diligence and Commercial Due Diligence

Benefits of Commercial Due Diligence

1. Make Informed Negotiations

The exercise provides the potential buyer with in-depth knowledge of the target company and the market in which it is positioned. Hence, providing buyer with an edge over the seller during negotiations. Being aware of all the necessary information will help the buyer establish a more accurate and reasonable purchase price.

2. Comfort of a Good Investment

Fund raising from financial institutions and/or shareholders may be necessary to complete the deal. A CDD report can help reassure investors that the investment will be worthwhile by demonstrating better prospects for the business.

3. Forecast Future Performance

CDD provides an in-depth overview of the target company’s competitiveness and market strengths. This knowledge enables potential buyers to better forecast the company’s long-term successes and respective gains.

4. Better alignment to Purchase Price Allocation (PPA) exercise

Since CDD gives rise to a quantitative assessment of the growth projections used as a basis for the transaction, it tends to give a more reasonable purchase price to be allocated to the acquired assets and liabilities, especially the intangible assets, and leads to more accurate residual goodwill.

Government Assistance Schemes

Companies may also obtain help through Assistance Schemes in order to go about M&A enquiries. Below shows the different schemes companies can apply for depending on their desired outcome.

How Can CLA Global TS Help?

Our Commercial Advisory team possess in-depth experience and an established track record in various business valuation engagements for international Financial Reporting Standards and have the capabilities to overcome the challenges of Mergers & Acquisitions. Navigating Commercial Due Diligence is a critical process that should be entrusted to experienced professionals who are able to cater to your companies’ needs.

For all questions or concerns on M&A and Commercial Due Diligence matters, please speak to our specialists.

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CONTACT US

Commercial Advisory Team

Grace Lui Co- Advisory Leader gracelui@sg.cla-ts.com

Karen Lau Associate Director karenlau@sg.cla-ts.com

Krishna Sadashiv Advisor ksadashiv@sg.cla-ts.com