Structured Due Diligence
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Once any firm plans to pursue an M&A transaction, the course highlighted the main aspects in Due Diligence (HR, Financial..etc.). Do you agree that a standardized check-list on the Due Diligence to approve the transaction? or should firms have some sort of flexibility depends on the sector and the timing?
I agree that a standardised checklist would go some way to assist it ensuring that key deliverables have been satisfied, but I would caution on relying too heavily on a rigid standardised checklist and companies and their relative industries are very unique which always require a customised approach.
We have a standard checklist that we use as a template and then customize it at the beginning of each due diligence. Each transaction has its variables, but in my opinion it is essential to start from an all-inclusive list and adjust accordingly. I also believe it isn’t enough to just check thing off the list. I ask the Directors to present to the Executive Committee a SWOT analysis of the transaction (for example IT) for their department in order to (1) show they have done an analysis, and (2) better prepare the company for integration.
There is a standard list of items that need to be checked for any due diligence. Some specific items will be added depending on the type of business, activity and also the amount of risk we want to mitigate.
A standard DD checklist definitely is required to improve the productivity of DD. However each transaction is different, before the DD kick off, it is important to customize the standard checklist according to 1). Transaction structure (asset deal, share deal etc.); 2). Target’s business nature 3). Target’s scale 4). Known/ Unknown of the target 5). What is important for the post-closing integration
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