Commercial due diligence in construction

For a Dutch PE client, completed a CDD on a target in residential real estate maintenance/renovations

Our team validated the market forecast and attractiveness, identified purchase criteria, and assessed the target’s performance; the resulting report supported the deal being greenlit by our client, financed by lenders, and successfully executed.

Context

Our clients’ target operated in the public/semi-public residential real estate maintenance and renevations segment, primarily serving housing corporations, educational instutions, and hospitals. Their focus was on building transformation, including for sustainability and the associated certifications required by government.

The CDD was to centre on the prospects of this highly fragmented market, the sustainability of the target’s recent strong growth, and their performance against purchase criteria to be defined.

The Eden McCallum team was headed by a project leader with 30 years experience including over 100 due diligence assignments.

Approach

The team conducted desk research and interviews with experts, competitors, customers, and the target’s management to build a segmented picture of the market’s service and geographic growth prospects, value chain dynamics, and competitive environment. Key insights focused on labour supply, materials, pricing/margins, and buying behaviours.

In parallel they developed and agreed purchase criteria and assessed the target against these, identifying key success factors and limitations, benchmarking EBITDA, and identifying risks to be further investgated as part of Financial/Legal DD where appropriate.

Impact

Delivered in three weeks, the resulting comprehensive CDD report resulted in a green light from the investment committee.

The report was then released to lenders, and ultimately the deal closed on the back of our findings.

Today, the business remains in our client’s ownership and has continued its growth along the lines defined in our analysis.