A major domestic trading company B was considering the acquisition of US oil pipe wholesaler company A.
Since most of the assets of company A were inventories and the market was volatile, there were concerns about the existence of obsolete inventories and unrealized losses. It was decided to carry out due diligence.
Company B requested valuation from our company, which has a track record of inventory due diligence, via its own advisors.
Solution
Gordon Brothers Japan (GBJ) used the Gordon Brothers Group's US teams as a contact point to calculate the fair market value of inventories located in North America (US, Canada, etc...).
Results
Company B succeeded in acquiring Company A by utilizing the fair market value calculated by Gordon Brothers Group as a negotiation tool for the acquisition price.*In M&A, inventory appraisal reports are used for the purpose of verifying the validity of acquisition prices, basic materials for acquisition negotiations, and allocation of acquisition prices to each asset (Purchase Price Allocation).
