Top 5 M&A Deal Breakers Standard Due Diligence Will Miss
Due diligence is crucial in every real estate deal, and every negotiator wants a complete understanding of the transacting buildings and their systems. Standard debt-level due diligence, however, is less comprehensive than EBI Consulting’s equity-level assessment, which includes the requisite level of detail for informed decision-making in these five critical areas.
1. Facade Survey and Report
A comprehensive survey and analysis of a building’s exterior can provide valuable insight into its potential issues, allowing property owners to address any issues early, before they escalate in cost or risk compromising a deal. EBI Consulting has a team of architects, engineers and other professionals who conduct the assessment and help clients review and interpret the findings.
Tech-savvy real estate professionals are driving the proliferation of drones, discovering new applications for the technology and leveraging it to deliver lower-cost and superior results. Facade inspection is no exception.
“Using drones gives us information similar to what a technical expert can obtain with an arm's-length exterior evaluation,” EBI Senior Vice President Dan Spinogatti said.
EBI National Program Director for Equity and Special Services David Stewart said “having a strategic relationship with Best Drone Services allows us to mobilize nationwide on very short notice for low cost.”
2. Roof Survey and Report
This gives owners a detailed analysis of the condition and maintenance of the roof, and proposes an ongoing routine preventive maintenance program. Immediate repairs or replacement are sometimes indicated.
The report includes extensive photo documentation. EBI’s team takes core samples on request to determine the health of the entire roof assembly, including the insulation and roof deck.
3. Energy Audit
The modern emphasis on sustainability and green initiatives inspires the development of new energy-saving technologies owners can integrate to raise the profile of their buildings while enjoying significant cost savings.
In their cost-benefit analyses of the upfront large expenditure, utility data is key. EBI uses infrared cameras and cutting-edge processes to discover any energy-intensive systems sucking money.
“It’s really important to fully understand your mechanical, electrical and plumbing, as well as HVAC systems,” EBI Consulting’s Amanda Colby said. “They are vital parts of the building, and you need to understand how old they are, how efficient they are, and what the cost to you to operate them will be.”
4. Indoor Air Quality Report
Many tenants are becoming cognizant of the quality of the air they breathe in their offices, apartments, stores and warehouses, causing property managers to take a closer look at airborne irritants and pollutants.
“If the air is contaminated with volatile organic compounds, particulate matter, radon or other issues, you may find yourself involved in much more significant health and safety matters in the future,” Colby said.
EBI will investigate mold, temperature, relative humidity, carbon monoxide, carbon dioxide, VOCs and total dust, providing a snapshot of air quality and an alert to deficiencies in supply or circulation of air.
5. Probable Maximum Loss Seismic Assessment
Many insurance companies require a probable maximum loss assessment from a qualified consultant. Assessors examine statistical and historical data to predict how the property could be affected by a large seismic event. They identify structural concerns pertaining to seismic impact. Owners may want to order seismic retrofits to obtain a more favorable risk rating.
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