How Big 4 do Mergers and Acquisitions (M&A) | How to Prepare for M&A Interview of Big 4s

0:00 foreign worked for around five years there in before and then I moved to financial due diligence I've been working in FDD for over four years now and let's see how

0:33 many more years to go in FTD in Big Four so I think before we start the session let me just share my screen first one minute okay is my screen visible yes okay so before we start I think it

1:04 is already mentioned what we are going to cover today so we're going to cover you know an overview of mergers and acquisition what is merging acquisition we'll move on to due diligence and then discuss a little bit more about financial due diligence and specific so before we sort of Deep dive into these topics can anyone tell what M A is anything you know about mergers and Acquisitions anything about deals that

1:35 you know let's make the session Interactive anybody can raise hand and you know unmute your mic and speak or feel free to use the chat as well guys either in the chat or please unmute and speak guys foreign

2:09 Ty of maybe same business line or different business line so basically the big four structure the deal in such a way that the merger can take place without much hassle absolutely very close answer why don't when akshit why don't you go ahead one second one second who has raped that

2:42 Merchant Acquisitions are when a company merges itself with other company and perform and continue to perform joint operations joint business with with that company and acquisition is when a company acquires other company like in case of NDTV we have seen that adani have adani haven't acquired NDTV absolutely

3:15 should we give a chance acquisition is basically when two companies are going to do business together with the transaction of their assets and liabilities I mean I mean combined kernels like for example

3:57 would you like to answer also yes sir in merger two companies come together to do business with the with the pool of their assets and liabilities together in acquisition the bigger company acquires the smaller company and then they pull their resources to do the business together and our role in mnd is to facilitate the deals and set the prices for their assets and liabilities all together right right right

4:27 absolutely so let's take a look at what exactly emerging the acquisition is all the answers were you know very very close so M A is nothing but you know it's a process of companies buying selling or combining businesses mergers of course when the companies when the assets of two companies merge together it's called a merger acquisition is when one company is acquiring another company

4:58 this will you know give a more clear pictorial representation so basically some of the examples would be like when Vodafone bought Hutch Sr that would be called as an acquisition but recently as you would all know Vodafone and idea got merged so that was actually a merger so companies then that's acquisition and it's actually

5:31 M A's it might seem like a very complex term but everything is all the news that you would read there will be so many so many things going around is nothing but M A as basic as even Google acquired Android in 2005. so Google in itself did not create Android

6:02 they acquired it and look where Google is now because of Android so there are lots and lots of examples of margins and Acquisitions not recent years it it has been going on since ages merger with corporate marriage between two or more companies absolutely absolutely it's a corporate marriage between two or more companies they

6:33 so mergers and Acquisitions perform what is how the mergers and acquisition takes place actually so have put together a modular acquisition process it again it may seem complex on the screen but let us break break it down let us try to understand Eminem and where all are the opportunities for our Chartered Accountants where all we can

7:03 play role and how can we get there right so this is a typical merges and acquisition process let's start from cell side of course okay so subsequence it will always be from two sides one will be a sell side and one will be a buy side foreign

7:37 let's start and let's focus on how will a seller start the m a process arily very happy with how things are progressing but he still wants to expand more right he is he has already entered into the

8:13 what is the best way internal research team your research team what is the total Market size engineering Fields so what is the best way to enter what is the market share that thinking risk can capture who can be the potential Partners which

8:46 thinking bits can enter into partnership with right and by partnership I mean it could be many different ways of mergers or acquisition thinking Bridge could think of right they can think of selling a minority stake right by getting an expert in engineering field they can sell the entire company they can do a lot of things right so success first step hoga doing the research

9:19 detailed research on what is required to be done for the benefit of the company what would be the next step after the research would be strategizing right so what strategy would be best for thinking bridge to expand so teams 25 steak liquidated 25 stick 25 stick liquidated

9:53 expertise in the in taking coaching classes in engineering field okay so I'll be a decision so what would be the next step by thinking Bridge thinking bridge will then proceed towards diligence what is diligence they will be in-depth analysis of the historical numbers and they will be key deal indicators prepared for thinking Bridge TDL indicators we'll

10:26 talk about that in a little bit more detail in the in in next few slides but key deal indicators diligence report prepare hogi sell side diligence report cell side diligence report no Focus over historical spray now it is important to understand this is a seller sell side so this is a seller diligence report so thinking bridge will appoint the consultant to prepare that report

10:59 but now but that's Consultants duty to report all of the all of the findings whatever a consultant finds in a during intelligence so diligence as I told you will be focused on the historical numbers once the self-site diligence report is finalized it will be used as an input for valuation of the company valuation teammates

11:36 evaluation team business model historical numbers that will be used to prepare a business model or say thinking now thinking Bridge knows then they will invite multiple bidders there will be multiple bidding rounds from the market s

12:13 how many people are interested from the market that is called bidding rounds all of this a lot of this investment bankers help in a lot of this process because they have basically they have connects that okay XYZ private Equity XYZ institution or XYZ company is interested in buying institution like thinking Bridge right once the bidding rounds are carried out

12:44 the seller has decided okay we'll go ahead with XYZ company so there let's say there were let's say four companies then the company that is getting sold or purchased is called Target so the the word is Target so buyer will screen multiple targets choices

13:31 they sat together they said okay let's go ahead and enter into a formal process and let's let's close this deals right what will happen as a Next Step would be there would be information Exchange thinking bridge will share the historical numbers historical earning details financial statements and a lot of other

14:04 details in form of an information memorandum so it's called IM that's information memorandum so subscribe it's nothing but just like a pamphlet right a very detailed pamphlet company sponsor pages it depends information exchange basic details it will be like you know it will not be like company will not give away every information it has at

14:37 this stage based on the basic preliminary information there will be an initial evaluation of the company done by byju's by juice course information we are assuming that all the information is true there is no error there's nothing there they will give a non-binding offer to thinking Bridge not thinking Bridge actually thinking bridge is the company so thinking risk owners let's say at this company

15:10 subject to 567 conditions one of the condition will be subject to performing due diligence subject to closure of due diligence right this is non-minding offer as the name suggests it's it's something which is not binding on either of the parties it is just like a like an intent sometimes it's called letter of intent of memorandum understanding it's just an intent that okay we want to proceed ahead with the transaction and indicate a value of the transaction which would

15:38 be let's say a thousand crore or ten times of your you know latest earnings or something like that after this there will be a lot of negotiations that will happen and then they will enter into a due diligence phase due diligence phase would be would mean that was a seller due diligence because thinking Bridge themselves wanted to know that okay we are going into the market what are the issues that could come in the valuation of our company

16:10 when we go into the market so buyers will hire their own set of consultants and again it will depend this there's no set rule in the m a process it will it it will totally depend on how good the terms and understanding is between any buyer or any of the sellers so a lot of times it happens but a company like if a company is very

16:43 big they would want to be prepared in advance and if they want to spend money they do a due diligence in advance this is called as by side due diligence this is the real diligence foreign what all earnings have been shown in the information memorandum whether that's correct or not can that be relied on can

17:13 that be used in the valuation of the company or not right intelligence will there are lots and lots and lots of types of due diligence it's not only financial there is tax due diligence environmental due diligence technical diligence and a lot of other due diligences all of those due diligences are carried out in this phase we will discuss on different types of diligence as well and then of course next is closing and finalization and then there will be a

17:43 binding offer that will be given by byju's to thinking bridge and then there will be agreement signing at each step that we spoke about there are ample of opportunities for Chartered Accountants like us we'll speak about what opportunities in the next slide but it probably agreement signing mail lawyers other than that everywhere it's charted accountants everywhere right and then of course there's also a stage called integration

18:16 this is more like let's say English thinking Bridge thinking Bridge learning management system s so this is just one of the examples so that's one of the you know integration I would say module

18:47 which by juice will think about after you know acquiring thinking they'll be 100 other areas where they will they would want to integrate thinking brains so for example Finance is acquiring thinking they would want to get rid of the finance either get rid of or absorb the finance team of thinking Bridge within baiju so that there are some synergies right so integration is a very very big task again there are a lot of opportunities in integration as

19:16 well by just thinking examples just imagine integration opportunities in Vodafone idea merger like they have thousands and lacks of stores Vodafone ideas there are like thousands and lacks of customer support team Finance teams all of the processes are different so that's another task that happens after you know a legal entities either merged or acquired so this is broadly

19:49 the m a process how it looks like I know it it would have been a little bit of a heavy dose probably I I hope not but now let's like if if anybody has any questions let's address those now and then we'll move on to what are the opportunities for us in each of these you know steps process guys any doubts in the chat or you can raise your hands okay

20:24 please go ahead foreign

21:01 but think about Vodafone idea Vodafone before opening up their books in front of idea for the merger Vodafone would want to know themselves what is the issue or what are the pain points where idea can leverage on where idea can have a upper hand over Vodafone on those pain points so Vodafone would want to be prepared in advance for Palace that okay

21:33 counter actions rather then Vodafone will not be prepared and they will have a lower hand in the negotiations so always in big Acquisitions big mergers there's always a sell side diligence that is carried out by the companies so that they are prepared in advance strategy and research

22:05 screening and bidding negotiations integration so these are all the teams which basically help in all of those stages right so strategy and research but mostly it will be you know the company's internal mergers and acquisition team strategy team Corporate Finance team yeah management consulting firms again screening and bidding mate will be corporations M A teams different investment Banks and then negotiation transaction validation execution all of these teams right and then again integration

22:35 companies Ops teams as well as accounting advisory firms like big Force and by the way did you know like in order it I think but in deals I would say 95 of the deals made there's a virtual data room set up a virtual data room is like nothing nothing but a very very secure version of Dropbox in simple terms

23:09 and all of the data is uploaded to a virtual data room and sellers and then the seller can even whenever they will restrict the access sub files laptops videos so all of the files are very securely shared over virtual data room okay let's let's move forward so all of the specific

23:41 institutions that we spoke about in the previous slide have been categorized here so what all opportunities you will have if you enter into these fields so let's start with companies if you work in companies you can focus on you know getting into mergers and Acquisitions team strategy team tragedy fpna corporate finance accounting advisory firms May of course Financial due diligence then tax due diligence valuation other transaction advisory would include

24:11 you know value creation synergies deal ddv there are a lot of other you know transaction advisory within M A then management consulting and strategy and then of course there is management consulting and PES and Banks Etc as a chartered accountant it will be easiest to enter into accounting advisory firms and companies and there is like a superb path ahead in

24:44 both of these you know types of organizations if you enter into big four within this this is a very good path forward to become a partner of a big four even not big four I mean they're like tons of other Institute institutions tons of other firms as well in companies as well there's a lot of opportunities in m a and strategy teams and whatnot of course in Banks institutions and management consulting you may want to

25:16 there will be opportunities if you want to move from accounting advisory firms or companies to investment Banks Etc as well they generally prefer MBA candidates but nobody is stopping and even if you're good nobody's stopping anyone just because of a degree I have had a lot of friends who have moved from before to Investment Bank to private equities so there are ample of opportunities I'm sure it has already explained you all of the opportunities in in the classes but

25:49 I would I would just say one thing you should start I know many of you have already started your career but if you're starting from audit it will give you a lot of options in the future I remember when we started a career I I started my career with archit and a lot of other friends we all we all were you know very worried about choosing the right field to start with and we were all fortunate

26:18 to have started with audit because it really gives a broad perspective of a lot of things but of course no other I would say every other field even if you start with tax you will have equal opportunities however you will have broad Horizon broad understanding of things and you can get into a lot of other things easily

26:49 that's a service just Facebook foreign okay so this was about M A let's let's deep diving little bit into due diligence and then we'll move to financial due diligence so in the m a process like we spoke what is

27:21 due diligence it's either a self-site due diligence which is hair or it's a bicep due diligence which happens with at this stage right okay anyone who can tell what is due diligence we'll go to kirti First am I Audible yes so from my perspective I think due diligence is a process in which we check the genuinity of the perspective buyer or the seller offer merger or acquired

27:53 part whether that person is just vaguely entering into this transaction or it is a decisive move by the competitor just so you know get into the books of accounts and gain Insider information Duty lens is done to check these procedures and make sure it's a genuine sale and nothing else oh absolutely absolutely do you want to track basically sir dude religions means

28:25 in-depth analysis of the company there can be several type of due diligence attorney Financial tax and as you said but but in specific I want to talk about financial due diligence Financial due diligence means means understanding the financials of the company it is different from statutory audit because the scope is defined by client and not by regulatory bodies

28:56 okay okay great group would you like to try yeah is my voice is audible yes yes sir I think in Mna due diligence means Gathering of information analyzing of information and its verification in order to struck a profitable deal for both the parties so basically Gathering analyzing and verification of information on both the parts okay okay that is my understanding of due diligence in English

29:28 so all of the answers are absolutely absolutely correct you all nailed it so due diligence is verification all of what you've what you can see on the slide actually is due diligence right there is no set rule like audit there are no Accounting Standards or auditing standards which are you know laid out for auditing it's all about getting a comfort before you buy anything so if you're buying if you're buying a truck

29:59 or if you're buying a car right it's just how you would check whether that's correct or not our jets are thinking wheels so intelligence is all about getting what you are what you're actually seeing right so on me moving on to the types of due diligence

30:31 so there are numerous types I have just mentioned like six types here right there's a legal due diligence all of the legal documents are verified by the lawyers by legal documents it would include all of the title Deeds all of the litigations and whatnot right HR due diligence then there's a commercial due diligence operational technical financial and tax so they're like numerous due diligences there's environmental and it's a lot more than

31:05 we can actually think about and a lot of due diligence is actually done whenever a company is bought or a sold so let's say again before even getting into financial and tax they would want to understand commercial due diligence okay commercially how much scope there is to grow right what does the historical student count look like what is the what

31:37 is the number of courses sold how much is the overall Market size how much thinking Bridge has captured in the market how much is there to go in the future and so and so on and so forth right and then is most important a team of technical folks visit this side they they take a look at the Machinery capex the books that does not give I mean vs Financial

32:08 duties advisors can only tell you okay aging kitten right we see a lot of capex replacement expense that is being carried out every year so we can tell that okay you know yeah but when the technical folks will really visit the factory or the site then only will it give the actual Insight okay they will tell what is really the capex

32:39 required in the future right everyone will rely on the numbers for us but for everything else there will be a separate team technically hello again of course it will depend on the on the scale of the business of course now let's deep dive on to the financial Judaism

33:10 what is financial due diligence so Financial due diligence you know it definitely it will be described as a project where a detailed investigation and Analysis is performed to assess the key issues facing a Target's financial business right so this is this this really is financial due diligence a practically and financially duties so let's break

33:40 okay so what what I'm telling you is so it's it's primarily you can say first part generally is we call it business diligence or you know to understand the business risks and to understand what are the key business drivers that will be used in the business model right so first part would be key business Risky Business issues so

34:11 for example again I'm thinking Financial due diligence right so first of all we would want to understand historically students all of those Matrix right Revenue per student all of those things Revenue growth let's say Revenue broker right but Revenue per student decline over there right so there will be a lot of business risk associated so that is the first part that is something which is in India generally

34:43 it is done as part of financial due diligence although this is this is like a you know add-on to financial details it's not a core output of financial due diligence here's the first part second part is key deal indicators right so there are there are three statements that are generally prepared as part of financial due diligence quality of earnings net debt statement and working capital statement so I'll come on to that what those statements

35:14 are but that is the core output of financial due diligence which is used for valuing any company or for inputting the numbers in the business model and third is of course to understand each and every caption of the company right financial statement so third part would be a financial typical Financial duties report May there will be a commentary around each and every caption okay right there is plant and Machinery Plantation

35:45 historical turnover days right inventory mayor what is the evaluation policy of the company do they use fee for only for what is the inventory turnover day so there will be in-depth analysis on each and every caption they will be in-depth breakdown of each and every caption which will be again used as an input for the key deal indicators as I told you the key deal indicator is a QR quality of earnings debt and deadline statement

36:17 or sometimes we call it net debt statement and adjusted working capital analysis so to understand what these three things are let's let's take a look at where they are used right let's continue understanding okay before before getting into this anyone has any question question anybody can you know feel free

36:48 to raise your hands because once we get into this you need to like have your Basics cleared sir I have a question yes I have done my article shipment statutory order Department and my question is what kind of a mindset a person should have though who is working in due diligence sector and what are the ways for me to transfer take transfer in due diligence in long time say five years or six years from now

37:19 so drove very good question I think the best answer is I I was like you I was in statutory order Division and I moved from order to financial due diligence when I moved to FDD trust me I did not know anything about every day I did not know anything neither did the interviewer asked me about due diligence as such

37:49 what they asked me was you are doing statutory audit they tested me on strategy audit skills how much I knew about auditing how much I knew about the things which I was doing right based on which they told me I mean of course if you know things about due diligence it will be a you know I mean it will be it will be a plus point but if you don't know it they don't expect I mean if you move as a

38:20 fresher they will not expect you to know everything they will not expect you to know everything of course if you will be moving as an experienced candidate in a later part I mean of course they will have expectations because you will be expected to manage a team there right that is a different thing but if you move in the beginning of your career they will just expect you to know what you what you're actually doing okay

38:53 group five you want to go ahead Krupa Deepika in the because you are not Audible you need to remove your earphones I guess well can you get me yes yeah so generally what are the questions that you ask for the pressure for Mna role again they will they will test you and

39:23 frankly there is no set guideline of what questions are asked let us take this question at the end in depth but I'll just give you a short answer for now they will take your interview based on your CV they they will never have a set of questions ready for you they will take a look at what experience you have and then they will ask the questions accordingly they will not ask anything outside of your CV right right

39:56 the questions at the end not a problem yes let's let's start with this concept and let's see what actually is done in financial due diligence so as an example let's unless let's let's assume that by juice name thinking British at 1000 crores right

40:30 please don't mind the handwriting are we one thousands discounted cash flow method right so let's assume foreign

41:19 so the starting point always in any of the business model or projections or valuation for that purposes will be the historical numbers historical numbers past major earnings so you will have historically you will have let's say normal typically due diligence is carried out for three years three years period so teens up

41:50 foreign

42:26 foreign advertisement s one-time expenses so that is something which which was incurred just for setting up of the business that will not be incurred on a recurring basis so that is also unfair

42:56 to say that okay future maybe right so historical or a due diligence advisor we give as a you know as a financial due diligence advisor we give a quality of earnings right quality of earnings so we give a quality of earnings statement we say okay this is your reported earnings for the last three years and

43:28 then we will do 10 15 20 whatever diligence adjustments we find a lot of times it is like foreign something like definition adjustment to scrambled there some some definition adjustments like gain on sale of fixed assets right that is not a business income so coach management adjustments this

44:00 adjustments and then finally we arrived at adjusted earnings or adjusted ebitda ebitda is earning before interest tax depreciation and amortization so quality of earning is a very important statement that we prepare as part of due diligence where we show historical earnings after adjusting any one-time non-recurring any extraordinary any

44:32 basically anything that is not going to be incurred in the future it adjusted income so how does it look like is it it looks like something like this right so foreign

45:08 crore we reduced 150 crore of sale of fixed assets and then we arrived at adjusted Revenue which is nothing but you know normalized Revenue that can be used for the business projections similarly we have also adjusted ebitda these are very you know basic adjustments there's normally in a diligence they're like a long list of adjustments adjustments

45:52 will not penalize you we have added that back foreign now this is a number which will be feeded into the business model for the purposes of projections

46:24 so this is one of the key statement that we prepare for as part of financial due diligence now let's go back and understand this bridge where we were last three years normalized earnings quality of earnings present value business right now

46:58 however that that's not the case that's not how it happens foreign so whatever loan has been taken in the financial statements will be reduced from the value of business so 950 crore rupees

47:29 for the purchase of linking bridge but 50 crore rupees so that is adjusted from the Enterprise value of the company now there are a lot of debt like items as well but there are a lot of debt like items which are hidden in nature thinking

48:04 whatever you call it to me in a way that is a loan right that is not a working capital but for books so due diligence advisors

48:41 so that is a debt like item right so another important statement that we create for as part of due diligence is a debt and debt like statement debt and debt like statement is we take out each and every

49:12 debt or debt like item and opposite as well that and that line when we say that and that like it means date and date like as well as cash and cash flow items statements these are all the items which you both need to sit together and negotiate on okay debt actually

49:48 it is not prepared for last three periods it is for the latest periodic 31 22 Cube already then there's a restricted cash some let's say this is right so that that that that is a lien

50:21 again something right so that can't be you so that is as good as debt so that will not be used as cash in cash equivalent however there are other items which are debt like in nature that will be adjusted so quickly so one first one is age payable age payable means let's say let's say vendor code Learning Management Systems

50:54 so that is that two crore rupees actually is not payable in the normal course of business just because of some dispute that is overdue that is aged and that is debt in nature normal cycle says that is as good as dead right so what two crore rupees right there's some committed capex already is so that is

51:33 then there will be tax exposures like tax due diligence there are other due diligence which is which which we call it non-quantifiable but this is something which I mean we quantify as we as we move forward quantification so we say

52:03 okay this is tax advisors right so these are debt like items and then debt and debt like item total 47 crore web right which will be adjusted from the Thousand crore Enterprise Value that we spoke about earlier just I thought I'll touch upon last one also this is like okay so in m a there are there are ways

52:34 and solution to deal with every problem differently every deal I learn there's there's a different way to deal with every problem right that all of these are debt like in nature is right but something like litigation up a circus students

53:05 foreign how will you treat that in a transaction s

53:36 foreign

54:09 are very common but there is like again a long list and it's very dependent on each of the business yourself let's go back onto onto the onto this bridge Enterprise Value Enterprise Value okay quality of earnings pay we understood that

54:45 model evaluations because those are the debt sitting in the books so what does working capital mean s

55:23 in simple words that is called working capital it's a little different than how we have learned in audit or in Accounting Standards always like we have read like we we have always learned current asset minus current liabilities working capital but in a deal scenario working capital really is anything you need to run a business that is not capex or debt in nature is working capital right security deposits have a long term or a short term or debt

55:53 a great inventory everything is working capital however businesses debtor plus inventory minus creditor

56:25 however how will you know that working capital transactions to run that business foreign

57:01 Capital should be not 50 which is reported it should be 50 plus 20. actual working capital should be 70 crore rupees so it's coming up there is again a need to understand what is the adjusted working capital of a business for the purpose will in a way get more debt right so

57:31 financially third most important statement which we call as sorry adjusted networking Capital statements networking Capital statement normalized working capital statement let's take a look at what how does what does working capital look like

58:02 so foreign

58:41 foreign capital or reduce the creditors right complexity I'm just giving you an example probably sometime when we do a very deep dive a practical you know case case study for this sometime later plus minus but

59:13 crore starting businesses May it can it can be seen as an absolute figure also otherwise generally it is seen as the days because other business grow 80 crore revenue for 800 crore absolute figures which will not make sense so generally it is seen in terms of days

59:45 800 divided by 365 sorry 152 basically divided by 800 into 365. so much days so 69 days so this is your adjusted working adjusted working capital days crore 75 days 164 crore

60:18 so basically is which means 164.152 crore which means there is a shortfall of 12 crore again so let's come back onto the bridge so whatever was the total value of the business minus whatever is the debt plus whatever is the actual working

60:48 capital minus whatever is the target working capital will be settled by by juice will be paid by byju's to urchin sir or purchase a thinking Bridge so this is the you know it is called EV to equity Bridge Enterprise to equity rate so a bridge so we never prepare this bridge we never even we discussed this bridge of course but there is never a formal deliverable for the bridge the formal deliverables are

61:20 these three items quality of earnings net debt and debt like items working capital analysis statement we just we just discussed are the formal Financial due diligence outputs that are used to arrive at this bridge so I just introduced this bridge as a concept so you know why do we do Financial due diligence and finally if in our example if thousand crore was the Enterprise value 47 crore was debt and that like items actual

61:51 working capital was 152 crore and Target that was agreed was 164 crore company final bank accounts so this was this is what we do in due diligence and again I mean not not the bridge but yes so the these three things are called the key deal consideration or key deal indicator so there are several names

62:22 you'll you'll you'll go to different firms you will see different different different you know names in statements but conceptually these are the three outputs that are that that are used in a financial due diligence a report and you know used in the valuation of the company

62:52 right fddk master classes foreign Abhishek

63:47 so valuation is a very subjective thing okay so as a process subscribe

64:45 they will invite people for bidding process right and then they will based on just this non-binding offer signs and all of the diligence reports is not so easy it's not like it reported

65:20 what value you want to bid for our company right and then both of them will sit on a negotiation table they will say okay expenses

66:11 what is the difference the other difference with the assumptions so that the seller so that the buyer can play around everything is different for each of the company okay so second thing okay like a company

66:42 candidate me for m a or FDD like what skills or what thing they are looking into the candidate you need to okay so what if you're applying for a fresher right I apply it as a fresher and I'll again repeat myself I did not know anything about every day frankly I did not know one of my friends was already in FDD profile I sat with him for two or three hours

67:14 what they will test you is how much do you know about the financial statements how much have you have gathered in audit because audit May our financials Financial audit or financial dealership we will just speak about that also the other difference near the only difference is what it is very structured everything is laid out in Accounting Standards auditing standards of course laid out diligence is very flexible job or seller negotiated

67:44 foreign exactly and it will but a inventory making issues in the same range physical verification right bill of materials it is exactly the same in FDD it's only

68:17 that audit ultimate output is to give a true and fair opinion to the stakeholders but diligence May ultimately you have to just take another step and see how to translate that error into a valuation adjustments representation letter whatever you do right fddma it you just have to take another step and say okay inventory valuation

69:06 it's very hectic strict timelines of the SBA fddman timelines so Abhishek what happens is The Binding offer so non-binding offer keyboard it will give you a good perspective these are non-binding offers

69:46 pay let's say 30 days you have exclusivity for 30 days to reach at this stage so because of this reason

70:27 so you have to I mean cope up with the client's expectation a little bit having said that is the expectations but can we say like I have done the kpi certification in my article ship so can we say it like similar like that sorry I am not aware of console certification API key performance indicator certifications

70:58 I am not aware I am sorry my idea so what is the difference between audit and financial utilities you all already know a lot about audit fddma whatever in this short duration we learn so let's let's just go topic by topic so number one scope so scope is very very much defined in audit when I used to be in order we used to have that you should download it from the ICI website and we used to you know

71:29 even have every letter and every word written by ICI even for engagement letter scope everything right but asset due diligence there is no body I mean ICI is ultimately guiding Authority for all of the the entire profession however there is no standard as such it depends on the scope of work which is called as sow card Define diligence

72:03 what are they asking us to do is generally what we do and of course so we have standard scope of work so we generally go with that standard scope of work however there are a lot of companies what are they looking for in thinking they will know what are the pain points of this industry so they will ask us

72:34 right this will be diligence will be you know focused on deal issues there'll be little they will be testing but again limited testing they say auditory but again I have done 100 watching also in diligence it will depend on the on the client a real estate deals so they asked us to verify all of the customer agreements somebody asked in the team so

73:06 normally it is three years however it's not defined anywhere businesses it depends again the real estate deal I was talking about usme we covered all the years since Inception we covered

73:39 15 years so it depends I mean it depends but three years is standard ninety percent ninety five percent three years objective again audit my objective is to you know give an opinion to in fairhand he modified and modified opinion yeah objective like I told you one is the kdis which is Q of a detonate like and working capital and B is the identification of deal issues specific to the transaction

74:13 deliverable is again it depends on country to Country like India May generally deliverable format is PPT report accompanied by an Excel data pack us may like I've just started working there and mostly I have seen everybody just wants Excel right they just focus on Excel Excel data pack Excel commentary side but they want reports but when they go for fundraising lenders

74:44 okay you know this is the company we are asking for money for most Tempo report month I mean it depends on Market to Market and it depends on you know the requirement again deliver format is the same we just covered stakeholders Happy Days auditory there will be wide range of stakeholders I mean I have mc21 company audit report download but FDD is like very very closed group it's only for buyer and seller and in some instances lenders and

75:15 secondary investors it's very restricted audit report that you can you know you have easy access you need to sign a lot of release letters we call it with the issuer of the report that okay they'll be hold harmless letter there will be a lot of documentation involved for circulation of any of the reports moving on to professionals of course you need to be a chartered accountant for auditing in India but for FDD there is no set rule although in

75:46 India FDD industry I would say 80 of the people are Chartered Accountants but there are other 20 people who are just graduates or graduates and mbas or and whatnot or it is of course post-mortem analysis FDD is basically postmodern but it is required for future decision making it's not very restricted to historicals so that was it I think this was all that

76:20 I had to cover