Coordinated due diligence for a PE fund acquiring a Spanish industrial company

The Challenge

A London-based private equity fund had identified a Spanish industrial company as an acquisition target. The target manufactured metal components for the automotive sector and reported revenues of 80 million euros. The fund had a non-negotiable six-week window to complete due diligence before the exclusivity period with the vendor expired.

The complexity of the assignment lay in the need to run four simultaneous analysis streams — financial-accounting, tax, legal, and labor — across a company with four production facilities in Spain and two affiliated entities in Portugal and Morocco. The fund required all findings to be consolidated into a single executive report enabling the investment committee to assess the aggregate impact on deal valuation, with no stream producing a silo report in isolation.

Our Approach

BMC served as lead coordinator of the entire due diligence process, directly managing the tax and labor workstreams while orchestrating the work of the fund’s financial and legal specialists. From day one we established a structured data room with a prioritized document request index, a weekly status tracker for each workstream, and alignment calls twice a week to surface cross-stream dependencies early.

The tax workstream proved most critical. The target company had maintained transfer pricing arrangements with its Portuguese and Moroccan affiliates for four fiscal years without producing a Master File or Local File. It had also recognized deferred tax assets on loss carry-forwards whose recoverability was questionable within the business plan’s projection horizon. We quantified transfer pricing contingencies at 1.8 million euros and the at-risk deferred tax assets at 1.4 million euros — a total exposure of 3.2 million euros that had not been disclosed in the vendor’s information memorandum.

In the labor workstream, we identified four active early-retirement agreements and a company-level collective bargaining agreement containing CPI-indexed salary revision clauses not reflected in the vendor’s financial projections. We modeled the impact on the fund’s financial model across the three investment scenarios.

We completed all four workstreams in parallel without extending the six-week deadline, delivering an integrated executive report with a unified impact summary and a clear categorization of findings by materiality and urgency.

Results

The integrated due diligence report was delivered within the six-week deadline. On the basis of the quantified tax contingencies, the fund’s deal team negotiated a purchase price adjustment of 3.2 million euros, supported by warranty and indemnity clauses that BMC drafted and negotiated in the share purchase agreement (SPA).

The transaction closed successfully. The fund now has a transfer pricing remediation plan and a tax road map for the first 18 months post-acquisition, providing a clear path to bringing the target into full compliance across all five jurisdictions in which the group operates.