Due Diligence
Seeing beyond the numbers to make confident investment decisions
Highlights
A 360° view of steel assets and operations
covering both technical performance and market positioning
Beyond financials: deeper insight into risk and potential
to support confident M&A and CAPEX decisions
Steel Hub conducts rigorous operational and commercial due diligence for M&A, CAPEX validation, and strategic planning. Our team assesses steel production assets, processes, risks, and market positioning to deliver a clear picture of both current performance and future potential.
Steel assets are capital-intensive and technically complex — and many critical risks don’t show up in traditional financial reports. We go deeper to uncover operational weaknesses, hidden costs, and market threats that could impact ROI. Our experts combine technical and commercial insight to support smarter, safer decisions.
Your Advantage
Validation of technical claims and performance metrics
Early identification of bottlenecks, inefficiencies, and hidden costs
Scenario models to test growth and CAPEX plans
Actionable recommendations from steel industry specialists
How We Can Help
Operational Due Diligence
Deep-dive technical review of assets, processes, risks, and capabilities
Commercial Due Diligence
Market, customer, and competitive assessment to test positioning and projections
Due Diligence FAQs
What to expect when you need an independent technical view before committing capital.
What is the purpose of operational due diligence?
When the ownership of a steel plant changes, the buyer and seller need to agree on a fair value of the assets to determine the purchase price. To achieve this objective, prospective buyers typically conduct several types of due diligence.
Operational due diligence assesses the sustainability of current production levels and the feasibility of future production growth, evaluates the technical condition of the assets and identifies hidden capital expenditure requirements, and uncovers opportunities for operational improvements and cost reductions, for future value creation.
How does operational due diligence differ from financial and commercial due diligence?
Financial due diligence assesses the financial performance of a steel plant, covering aspects such as profitability, cash flow, debt structure and working capital management.
It is usually conducted as a desk-based study, relying primarily on documentation provided by the seller, without being able to (remotely) verify it.
Commercial diligence evaluates the market environment in which the steel plant operates. It forecasts future market growth and price developments, the suitability of the product mix, competition as well as raw material supply conditions.
While some elements of commercial due diligence can be assessed remotely, Steel Hub recommends a plant visit, particularly to verify the plant’s production capabilities and product mix and to assess raw material supply and quality.
Financial due diligence can be conducted by a generalist financial advisory firm, whereas commercial and operational due diligence require specialized industry expertise.
Steel Hub offers both commercial as well as operational due diligence services. Upon request, we also provide financial due diligence services.
What is the difference between operational and technical due diligence?
At Steel Hub, we use both terms interchangeably. We like the term “technical due diligence”, as we believe that the rigor and depth of our on-site technical assessments, conducted by our highly specialized steel industry experts drawing on decades of hands-on experience, set us apart from the standard services offered by generalist financial advisory firms.
How does Steel Hub structure and conduct an operational/technical due diligence?
Our operational/technical due diligence process consists of the following five steps:
- Remotely review and analyse the seller’s technical documentation available in the project data room
- Develop initial hypotheses and identify priority areas for investigation during the plant visit
- Conduct a technical plant visit (~2-5 days, depending on the size and complexity of the plant), inspect assets on site, interview plant staff and enquire additional technical documentation
- Prepare a technical plant assessment report for our client (prospective buyer)
- Translate the technical findings into financial implications:
- Advise our client on recommended downward purchase price adjustments, e.g., due to necessary revisions to the forecast production ramp-up or uncovered capex requirements
- Inform our client about previously unidentified improvement opportunities for value capture by a future owner
How long does operational due diligence on a steel plant take?
We can complete an operational due diligence on a steel plant in as little as three weeks, provided that the seller has set up the virtual data room in advance.
At what stage of the acquisition process should operational due diligence take place?
We recommend launching operational due diligence once financial due diligence is sufficiently advanced and has confirmed that the steel plant appears to be an attractive acquisition target.
We advise against initiating financial, operational, and commercial due diligence simultaneously. If financial due diligence alone leads to the conclusion that the steel plant should not be acquired, there may be no need to proceed with operational and commercial due diligence.
While financial due diligence is running, upon request, we advise our clients on which technical and commercial documents to request from the seller for upload to the project data room in preparation for operational and commercial due diligence.
What does a technical due diligence on a steel mill assess?
- Equipment condition: Assess the current condition, remaining useful life and maintenance requirements of installed equipment, and quantify the associated capital expenditure needs
- Production efficiency & bottlenecks: Validate reported production performance data through on-site inspections and identify bottlenecks in production processes and plant layout, enabling us to recommend necessary adjustments and identify opportunities for future performance improvements
- Current and future production: Determine if current production levels are sustainable and if expansion is feasible, what investments are required for it, and whether the seller’s production growth forecasts need to be adjusted as a consequence of technical feasibility analysis
- Product capabilities: Validate the plant’s current product mix (as it is common to find discrepancies between a plant’s advertised product catalog and its actual technical capabilities) and identify adjacent, more profitable product niches that could be served with minor adjustments to production technology, generating additional value creation opportunities that we share exclusively with the prospective buyer (Can also be part of commercial due diligence)
- Automation: Evaluate the condition and technological obsolescence of the plant’s automation and production control systems, identify potential risks of major production failures if these systems are not upgraded within a defined timeframe, and advise our client on necessary upgrades and their timing
- Supply chain: Analyse current raw material procurement strategies, supplier reliability, input material quality, and the plant’s exposure to raw material price fluctuations (Can also be part of commercial due diligence)
- Product quality: Assess current product defect rates and types, which is particularly important if the prospective buyer intends to serve new customers with more stringent quality requirements
What are the most common red flags you find?
Our findings vary considerably depending on the steel plant being assessed, but common themes include:
- Previously undisclosed CAPEX requirements for maintaining, upgrading or replacing equipment that is outdated or in poor condition
- Entire production areas presented as operational in the seller’s documentation, which we found to be out of service during our plant visit
- Overly ambitious production growth forecasts that exceed the plant’s existing production capabilities and/or underestimate the investments required to achieve future growth
- Outdated production control systems that, if not upgraded, could lead to major production disruptions or even complete plant shutdowns
- Previously unidentified product quality issues that cast doubt on long-term profitability and plans to enter new markets
- A more limited product mix than advertised by the seller
- Previously unidentified production capabilities that would allow an expansion of the product mix and could enable an entry into more profitable market segments
- Discrepancies between reported and observed production performance indicators, such as EAF tap-to-tap times
- Inconsistencies in conversion cost calculations
- Suboptimal plant layouts (e.g., continuous casting machine introducing bottlenecks)
- Incorrect operating settings in auxiliary plant equipment
- Inadequate scrap supply and handling arrangements
How to you manage the seller’s confident information?
Steel Hub is bound to the same NDAs signed by the prospective buyer.
In all of Steel Hub’s projects, we refrain from “criticizing” the seller or its operating teams. On the contrary, we place great value on building constructive relationships of mutual trust.
Nevertheless, we transparently report any identified red flags to our client and advise on their implications for the valuation. Our client then decides which findings to share with the seller.
Can you support both buyers and sellers?
Steel Hub conducts due diligence for both prospective buyers and sellers of steel plants. Sellers commission vendor due diligence to prepare for divestment, establish a fair valuation and target selling price, and accelerate the sales process.
Furthermore, sellers benefit from Steel Hub’s independent assessment of the many plant improvement opportunities that we typically identify during our evaluations. In one case, a seller that had commissioned us to conduct vendor due diligence reconsidered its decision to sell the plant, opting instead to improve its operational performance before potentially resuming the divestment process at a higher valuation in the future.
Operational due diligence shares some similarities with our 360° plant assessments, which we conduct for plant owners and management teams seeking to identify operational improvement opportunities or resolve specific technical challenges, without intending to sell the plant.
Do you support investors and lenders who have limited knowledge of the steel industry?
Yes, absolutely. We place great value on developing and strengthening our clients’ steel industry expertise throughout our engagements. We also prepare our technical plant assessment reports in a way that makes them accessible to both commercial and technical experts alike.
Even clients with extensive knowledge of the steel industry are often impressed by the highly specialized expertise and decades of hands-on experience our Steel Hub experts bring to the table. This is because we carefully tailor each expert team to the specific characteristics and technical requirements of the plant being assessed.
Can you work with private equity investors in a fast-paced environment?
In fact, the majority of our due diligence clients are private investment firms, often led by senior investment professionals or former top-tier management consultants.
To meet our clients’ needs, we pair our technical experts with seasoned management consultants (e.g., former McKinsey & Company consultants) who understand the expectations and ways of working of private equity investors. Our financial experts also help translate our technical findings into financial implications to inform our clients’ investment decisions.
Do you produce a post-acquisition improvement plan from the findings?
In its technical due diligence reports, Steel Hub always shares initial plant improvement ideas with its clients. However, detailed implementation roadmaps are typically not requested during the bidding stage, as the transaction may ultimately not proceed.
Once the transaction is completed, many new owners re-engage Steel Hub to further develop and help implement the improvement opportunities identified during the initial plant visit.
Our Client Results
Reducing Longitudinal Depression and Hot Cracking in Duplex Stainless Steel Slabs
Key Takeaways Problem: A stainless steel producer in Asia faced defects in duplex stainless steel slabs due to improper casting
Controlling Spangle Formation During Galvanising process
Key Takeaways Precise Process Control is Essential – Managing zinc bath chemistry, cooling rates, and substrate standards helped achieve consistent
Addressing Edge Crack Issues in Duplex Stainless Steel during Hot Rolling
Key Takeaways Comprehensive Process Analysis – A systematic review of the hot rolling process identified key factors contributing to edge
Reducing Steel Breakages and production stoppages in a cold rolling mill plant
Key Takeaways Problem: Frequent strip breakages and stoppages in a Bangladesh cold rolling mill. Diagnosis: 360° assessment identified process and
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