Especially for the financing and the akquisition of one project, a project portfolio or a corporate target the due diligence forms a special and important part within the whole process.
A transaction’s, project’s or asset’s risk profile will be prepared from the final results of the due diligence. The investor’s and lender’s final investment decision depends on the final risk profile. It is important for the Advisor to create investor’s and lender’s trust in the quality of the due diligence reports. Most covenants and respective conditions in the documentation (e.g. financing and service contracts, O&M contracts) and, also important, the pricing of the transaction, project or asset will be negotiated on the basis of the final risk profile.
- Energetical aspects: wind, solar, hydro, geothermal etc.
- Market and prices
- Real property
- Land and environment
- Commercial and financial (financial model, cf model assumptions)
- Legal relating to property, country, general laws and project contracts
- Legal relating to financing and transaction structure and companies involved
- Special subjects: e.g. bird migration, fish population
- Co-ordination of the whole dd process; the Advisor is the first contact for all independent consultants („ICs“) involved
- Assistance in the definition of reports‘ contents and scope of work of ICs
- Assistance in the collection of information for ICs and distribution of results among ICs
- Discussion of draft reports with ICs and collection of information necessary to improve qualifications and other adverse findings and statements
- Preparation of the cash-flow model and scenario calculations
- Transfer of selected dd results into the cash-flow model and scenario calculations
- Preparation of a risk profile
- Suggestion of mitigating and handling measures as well as appropriate provisions, conditions, covenants etc. for the documentation