We understand that commercial due diligence is focusing the strategic position and growth aspect of the target company. Does the commercial DD is still required for horizontal merger when the buyer himself are in the market, they might know better them other people who is not in the market in term of growth aspect? Or the consultant can give better analysis from the strategic point of views?
You are right. Hiring consultants is not always a silver bullet. Nevertheless, the transaction participants will still need to objectively justify the transaction and its assumptions to their management and all external stakeholders. It’s better to qualify assumptions with robust research and expert opinion that would otherwise take years for the company to develop/acquire.
In case of horizontal merger, while the buyer may himself know the market, customers and competitors better, commercial DD may still be required. Consultants who are experts in the business sector handling similar deals and working with various other clients may help bring in independent perspectives through their globally accredited research, analytics and strategy consulting teams and platforms. Such perspectives and recommendations are generally brainstormed, questioned and debated in order to reach a mutual alignment justifying the assumptions and for further presentation to the top management and external stakeholders.
Think it depends on how confident the acquirer is about its knowledge about the market. External CDD advisor is not necessary, but M&A manager may still have to address CDD relevant questions when reporting to senior management and Board investment committee.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.