Client

Leading international healthcare and diagnostic services provider

Client Challenge

The сlient has approached KPMG Deal Advisory team in respect of the envisaged acquisition of the Ukrainian company. The сlient has requested financial and tax due diligence to be conducted by KPMG in order to identify the key risks associated with the acquisition of the Ukrainian company.

KPMG Response

• KPMG has carried out financial and tax due diligence and identified a number of risk areas, which were taken into consideration by the сlient when building financial model and negotiating on the price of the deal, as well as on representations, warranties and indemnities from the seller.
• KPMG has conducted a number of interviews with the target’s management. We have identified that the reliability of financial statements was low, as management did not prepare financial statements in accordance to IFRS. We have therefore proposed a number of adjustments to reported EBITDA in order to reflect the true and fair view of the target’s operations. 
• The target was involved in a number of tax optimization schemes and transaction with related parties. KPMG has estimated a volume of such transactions and has proposed a number of normalisation adjustment to reported EBITDA, net debt and working capital.
• KPMG has prepared tax profile of the company, including identified and estimated tax risks.
  
  

Why KPMG

KPMG Deal Advisory practice in Ukraine has knowledge of specific sector related issues. The key team members had recent experience in a number of healthcare engagements – financial and tax due diligence of a network of diagnostic centers in Ukraine, buy-side due diligence of one of the largest providers of specialist behavioural health services in the UK, buy-side due diligence of pharmaceutical company in Ukraine, tax due diligence of several Ukrainian radiology centres.

KPMG has provided recommendations to the сlient in respect of each identified risk area. Such recommendations were provided in order to facilities the process of preparing the Sale & Purchase Agreement with the seller.