That is a big topic. I would suggest below three points for thought. The risk of a M&A transaction would escalate when there is:
(1) lack of detailed DD plan partly due to insufficient research ground works on the Target and the Target’s industries;
(2) no background check of the shareholders and related companies. For example, has the major shareholder made the Target as a dumping ground of poor performing assets (valuer’s report overstating but not making economic sense) and has the Target entered into long term contracts with related companies?
(3) Overlook of frequent regulatory changes with lagging guidelines from the respective government bodies when the country in which the Target operates. One example is the change of restriction of lending limit to property development companies or transfer of foreign ownership in equity shares of property or land holding companies in some of the Asian countries. Uncertainty in the interpretation of law could be a deal breaker if considered unable to mitigate.
