Technical Due Diligence: Technical standards of the assets

Within the scope of technical due diligence, prospective buyers can examine the essential technical assets of a company for sale in order to derive the possibilities and limits for the business.

In particular, technical due diligence is concerned with determining the technical and technological standard of the assets, their state of use and their suitability and utilization for the current and planned business. In the case of machinery and equipment, it is not only their capacity and productivity that are of interest, but also their manufacturing precision and probability of failure. Experts can draw valuable conclusions about the competitiveness of the company under consideration from the assessment of the machinery and equipment, but also from the use of raw materials, the material flow and the operational processes by means of benchmarking. Technical due diligence also allows conclusions to be drawn about investment requirements and the operating costs to be expected in the future.

Example: A component manufacturer for large gears used in wind turbines has to produce gears with the highest precision. All CNC milling and grinding machines must meet the same high precision requirements. In a technical due diligence process, experts can see whether this precision can really be met by all the machines involved in this manufacturing process.

Part of the technical due diligence is also an assessment of the industrial property rights used in the company. The effectiveness of current and future protection can have an impact on the company’s market position and profitability.

Information on energy consumption and pollutant emissions is also becoming increasingly important for potential buyers, because they are also increasingly making environmentally friendly decisions in their acquisitions. Many entrepreneurs would like to move their business activities in the direction of “climate neutrality”.

And compliance with occupational health and safety requirements is also examined in the course of technical due diligence.

In this context, technical due diligence also assesses the impact of current and likely future legal and regulatory requirements on the continuation of business operations.

All these findings obtained from technical due diligence have an impact on the expected future results of operations, future cash flows and business risks and are incorporated into the financial due diligence process via the commercial due diligence process


What are your challenges?

Restart Dialogue