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Investment Due Diligence Plan

This letter outlines a 4-stage due diligence process for Bilal General Transport LLC's potential investment in Gitto Construction Ltd. Stage 1 involves an initial screening of Gitto over 1 week, including reviews of legal/ownership documents, finances, operations and valuation. Bernard Obika will lead a team to perform Stage 1 and provide an initial report. Stage 2 involves an in-depth evaluation of critical issues identified in Stage 1. Stages 3 and 4 include detailed legal, financial and commercial due diligence, as well as assistance through transaction completion. For Stage 1, Obika proposes a £4,000 expense fee and 4% equity in Gitto if the deal succeeds. Stages 2-4 will be determined after

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59 views2 pages

Investment Due Diligence Plan

This letter outlines a 4-stage due diligence process for Bilal General Transport LLC's potential investment in Gitto Construction Ltd. Stage 1 involves an initial screening of Gitto over 1 week, including reviews of legal/ownership documents, finances, operations and valuation. Bernard Obika will lead a team to perform Stage 1 and provide an initial report. Stage 2 involves an in-depth evaluation of critical issues identified in Stage 1. Stages 3 and 4 include detailed legal, financial and commercial due diligence, as well as assistance through transaction completion. For Stage 1, Obika proposes a £4,000 expense fee and 4% equity in Gitto if the deal succeeds. Stages 2-4 will be determined after

Uploaded by

folaodet
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Dear Ali

Due Diligence for Potential Investment in Gitto Costrucioni Ltd

Further to our discussions, this letter sets out the outline and scope of the work in relation to due
diligence for the potential Bilal investment in Gitto construction. I am delighted that you have asked
me to take this project forward by undertaking the initial due diligence.

In order to minimise costs resulting from abortive work, we will carry out the work in four stages
starting with an initial very brief screening to ensure that the transaction is worth progressing further
I will prepare a report at the end of this initial phase and this discuss with you. A decision will then be
made on whether to move to the next stage. I set out below the four stages

Due Diligence of Gitto

Stage 1: Initial Screening (One week)

 Exchange of letter of interest;


 Exchange of Non Disclosure and confidentiality agreement
 Initial Discussion with MD Gitto ( Followed by visit if required)
 Compilation of information request letter listing required information for the stage
1.
 Review of :
o Legal status, ownership and management
o Initial scrutiny of audited accounts past 5 years
o Current Cash and funds flow
o Plant ownership, management and general condition
o Other assets
o Backlog/order book and pipeline
o Broad Project status and performance on existing projects
o Claims and disputes
o Client list & Client reference
o Preliminary valuation

 Summarising the results of initial DD for presentation and discussion with you.

Stage 2 : In depth (drill down) DD on areas/issues identified at stage1, which are critical to “go” or
“no go” decision

 Substantive valuation
 Preparation of Heads of Terms
 Summarising the results of substantive valuation and focussed (drill down) DD
for discussion with you.
 Assistance with negotiating and agreeing Heads of Terms

Stage 3: Detailed Due Diligence:

 Legal
 Financial
 Commercial
 Plant and Equipment
 Business Plan
 HR
 Preparation of detailed DD report
Stage 4: Assistance with the transaction through Heads of Agreement to completion, including

 Assistance with commercial negotiations;


 Overview of the appropriate legal documents, liaising with and providing
comments to your lawyers;
 Review of warranties in general, especially those in relation to ownership of
plants and equipment, debt, accountancy and taxation matters;
 General project management to deal closure.
.

The Team for Stage 1.

The team for Stage 1, will consist of Myself and Fola Odetoyinbo. I will remain accountable to you
throughout for the handling of the project.

Expenses and Fee

Our fee will comprise 2 elements:- Cost plus equity in the company.

Stage 1 : Expenses :
We propose a lump sum amount of £4,000 to cover all expense (inclusive of flight to Nigeria, if
required, and accommodation). As these are to cover expenses we would grateful if this can be paid
now to help with mobilisation.

Stage 1, Success Fees:


In lieu of fees, we propose to take a small equity (say 4%) in Gitto as sweat equity and introduction
fee should the transaction succeed.

Stages 2, 3 and 4
To be determined upon completion of stage 1 and decision to continue.

Agreement

The terms set out in this letter shall take effect immediately upon your countersigning this letter to
signal that you are happy for us to proceed on the staged methodology and terms set out above.

We look forward to working with you to pursue this exciting opportunity. If you have any questions on
the above, please contact me directly on 07900480505 or via email.

Yours Sincerely

………………………………………………….. Date ……………………………...


Mr Ali Bilal
On and behalf of Bilal General Transport LLC

………………………………………………….. Date ……………………………...


Bernard Obika

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