Services
Industrial Due Diligence
Technical, regulatory and legal analysis of the asset base for M&A, Private Equity and restructurings: uncovers hidden risks, deferred CAPEX and contingencies of the productive asset base.
What is it?
What is industrial due diligence?
Industrial due diligence closes the gap between what the financial statements say and what is really on the shop floor — before the SPA is signed.
In any M&A, refinancing or special-situation transaction, the balance sheet describes the assets at depreciated acquisition cost. That does not reflect the real technical condition, the functional obsolescence or the CAPEX needed to keep the production base operational over the next five years. Our industrial DD puts figures and technical evidence on that difference.
The team combines field engineers, RICS valuers and financial analysts. The process includes on-site inspection with the Valuers App (structured, traceable capture), technical and legal document review, obsolescence and residual useful life analysis, a 3-5 year CAPEX plan and fair-value measurement for Purchase Price Allocation.
Glossary · acronyms and technical terms
- CAPEX — Capital Expenditure
- Capital investment spending: money allocated to renew, expand or improve the base of productive assets. The 3-5 year CAPEX plan is one of the standard deliverables in industrial due diligence.
- Due Diligence
- Technical, legal and financial review process prior to a corporate transaction. Industrial due diligence specifically covers the technical condition, value and risks of the target's productive asset base.
- FMV — Fair Market Value
- Fair market value: the price at which an asset would change hands between informed buyer and seller, without pressure and with reasonable knowledge of the market. It is the most common basis of value for bank collateral on industrial assets.
- IFRS — International Financial Reporting Standards
- International accounting framework applicable to consolidated financial reporting. In a valuation context, IFRS 3 governs purchase price allocation (PPA), IFRS 13 defines fair value measurement and IFRS 16 governs lease accounting (key in Sale & Leaseback transactions).
- M&A — Mergers & Acquisitions
- Mergers and acquisitions: corporate purchase and sale transactions between companies. In industrial contexts they require an independent valuation of the tangible asset component.
- OLV — Orderly Liquidation Value
- Orderly liquidation value: the price expected in a managed sale of the assets within a reasonable period (usually 6-12 months), with prior preparation and qualified buyers. It usually sits between 60% and 85% of market value.
- PPA — Purchase Price Allocation
- Accounting allocation of the price paid in an acquisition across the various assets acquired. It is carried out after the closing of an M&A transaction and requires an independent fair value valuation by asset type, defensible before an auditor (typically Big Four).
- Private Equity
- Private capital: investment funds that acquire majority stakes in unlisted companies. In industrial targets they commission technical due diligence to validate the productive asset base before closing.
- RICS Red Book — RICS Valuation – Global Standards
- Global methodological standard published by RICS for professional valuations. It defines the bases of value (Market Value, Fair Value, FMV, OLV, FLV, etc.), the approaches (cost, market, income), the report structure and the independence requirements. It is the reference required by corporate banking, Big Four auditors and European regulators. It operationally implements the IVSC's IVS.
What is it for?
Five situations in which you need this service
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Validate the target's asset base before the SPA
The buyer needs evidence of the real condition of the production base before signing: on-site inspection, obsolescence assessment, residual useful life and technical, regulatory and legal analysis of the industrial asset.
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Allocate the purchase price (PPA) after closing
After an M&A deal closes, consolidated accounting requires PPA: fair-value measurement by asset type under IFRS 3, defensible before a Big Four auditor. It is the standard technical deliverable in the first 90 days after closing.
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Identify deferred CAPEX and hidden risks
Financial statements do not show what is still left to invest. We identify equipment with exhausted useful life, obsolete lines, unbudgeted CAPEX and regulatory risks — all quantified in a 3-5 year investment plan.
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Support the investment committee with an independent value
The committee needs a technical second opinion before approving the transaction. We issue an independent fair value of the industrial component under the RICS Red Book — the figure that breaks the bias of the banker's valuation model.
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Defend the value before the counterparty
In the final negotiation, the buyer needs technical arguments to justify discounts to the seller's price (or to defend the price against the sell-side). We provide the data with full methodological traceability.
What will you receive?
The deliverable
Every due diligence closes with a report that is defensible before a Big Four auditor, syndicated banks and the investment committee: a risk matrix by asset and site, an independent valuation under the RICS Red Book and full methodological traceability.
- Complete industrial due diligence report
- Risk matrix by asset and by site
- Recommended 3-5 year CAPEX plan
- Fair value valuation for PPA under RICS
Typologies we cover
- Complete inventory of the asset base
- Critical and secondary machinery
- Vehicles, fleets and auxiliary equipment
- IT infrastructure and enterprise software
- Leased or financed assets
Methodology
Technical and financial document review
Analysis of obsolescence and replaceability
Sector and comparables benchmarking
Compliant with the RICS Red Book
Capabilities
- On-site inspection with structured digital capture
- Assessment of technical condition and residual useful life
- Identification of operational, regulatory and maintenance risks
- Analysis of CAPEX and investment needs
- Independent valuation for Purchase Price Allocation
Sectors
Common questions
Frequently asked questions
- What does a technical due diligence of industrial assets involve?
- A thorough technical audit ahead of a corporate transaction (M&A, acquisition, merger). We review the physical condition, fair market value, technological obsolescence, operational contingencies and regulatory compliance of the target's production assets.
- How long does a due diligence take?
- Between 2 and 6 weeks depending on scope: a single site can be completed in 10-15 days, while a multinational portfolio requires a month or more. We work as a team alongside the financial and legal due diligence to align findings.
- What does the buyer receive at the end of the process?
- A dossier with a detailed valued inventory, identified red flags (obsolete assets, deferred investment, regulatory risks), market value ranges and recommendations on price adjustments in the negotiation.
- What level of confidentiality applies?
- All our engagements are subject to a mutual NDA. A dedicated team, a restricted data room and strict internal protocols for handling sensitive information.
- Does the industrial DD serve for the post-closing PPA?
- Yes. The pre-signing DD identifies the inventory and provides indicative values. After closing, the Purchase Price Allocation (PPA) is carried out under IFRS 3 with definitive fair value asset by asset, defensible before the Big Four. We usually reuse the technical capture from the DD to accelerate the PPA — the client pays for a single plant inspection for both phases.
- How does it integrate with the financial and legal DD?
- Our technical DD is aligned with the timetable set by the transaction lead (investment bank, M&A boutique or the client's adviser). We share the data room with the financial teams (PwC, KPMG, EY, Deloitte) and legal teams (the client's usual firms). The technical finding becomes a quantitative argument for price negotiation.
- Do you cover distressed or insolvency transactions?
- Yes. In special situations (a target in pre-insolvency, the exit of a distressed-situations fund or insolvency administration) we work by calculating OLV and FLV, identifying saleable lots and proposing a realisation strategy. We coordinate with the insolvency administrator and the body of creditors where applicable.
Tell us what you need
Step 1 / 7: What deal are you preparing?
What deal are you preparing?
Select the main phase — if you combine several (e.g. M&A + PPA), tick the most urgent one.
Need to know the real value of your assets?
Request your valuation. First contact, scope and fees with no obligation, under the RICS Red Book standard.
No obligation · RICS-regulated firm · European coverage