Due Diligence Challenges: Incomplete info
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During the due diligence stage, how do you usually deal / overcome with the challenge of not getting sufficient information in a predefined period of time, before things getting sour between buyer and seller?
Common reasons of this could be due to bad record keeping, lack of expertise, poor communication, inadequate technology, etc.
To address this challenge and prevent potential conflicts between the buyer and seller, here are some strategies to consider:
1. Clear and Transparent Communication
2. Prioritize Key Information
3. Collaborate with the Seller
4. Utilize External Resources
5. Extend the Due Diligence Timeline
6. Focus on Risk MitigationFinally to mention is to escalate the issue: If despite efforts, the challenge of insufficient information persists and begins to strain the buyer-seller relationship, it may be necessary to escalate the issue to higher levels of management or involve legal counsel. Seek guidance on how to proceed while maintaining professionalism and preserving the deal’s integrity.
This is a very real problem. In my own experience, I have encountered this problem. However, identifying there is a problem with data available is the first step. Once identified, few steps that can be considered for obtaining data are as below:
– Highlight to Leadership & Corporate Strategy teams at both ends that there is a problem
– Initiate conversations with key stakeholders in seller’s side and look for alternative ways to get the data you (buyer) wants
– Involve legal team (seller) to evaluate the risks and potential liabilities
– – Calibrate timelines based on the availability of dataFor a large company, this is often indicative of deeper issues that warrant additional scrutiny. A typical red flag and a leading indicator for other issues to be uncovered.
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