Consultants in the due diligence phase

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    Mohamed Emara

    Usually targeting companies are hiring consultants for the due diligence process and sometimes the targeted company is also hiring a consultant to ensure that the deal is the best for its shareholders’ interest. However, I believe that an internal experienced team is essential for efficient and effective due diligence.


    Fathurrahman Latama

    It depends on the capabilities of the internal team. For instance, if however, the acquisition takes place in the industry or market outside of the acquirer expertise, then consultants may be needed.



    Hi Mohamed,

    I would agree with Fathurrahman’s comment on the capabilities of the internal team. For a recent M&A I was involved with, there was some information we were not allowed to view until after the contract was signed, so a 3rd party was hired for both sides that acted more like a clearing house to ensure that it was still a good deal to move forward with. Once the contract was signed, we unfortunately were denied access to that for our internal DD, and had to re-ask our partners in the other organization for what was provided. There is definitely room for efficiencies, but I also understand why a 3rd party was needed in this scenario.




    It all depends on the company. I’ve done deals in big companies and small. The smaller ones without a Corp Dev division need to continue business as usual and cannot handle doing both business as usual AND due diligence. Also, most people do not know or can not know about the acquisition/merger and keep it to a small team which can’t handle the massive/granular due diligence of a Fortune 100.


    Billy Fok Kam Luen

    To conduct the DD process, I prefer to use internal staff to do the work as they understand the company process and they are known the staff. but if we use internal staff to conduct DD, will it be a conflict of interest?


    Carolina Batista

    I also agree that internal staff have more capability to run a DD. However, it might be impossible to do it and keep your everyday activity deliveries. Quite often, a combination of internal staff + external consultant can be helpfull to compile the material in a reasonsable timeframe.


    Ronaldi Wisastra

    I agree with Carolina. Having both capabilities on the team doing DD really help the process of getting the information for process alignment or the right question asked as well getting the best knowledge and external experience to help the internal team navigate the target company complexity.


    I think it depends on the skill set of the people within the organization. I do believe that internal employees bring great value to the organization and they also know alot about the company. I do think a outside consultant can bring value but as a partnership with the organization and not a stand alone.

    Consultants can be a great help to the acquisition but needs to work in partnership with all participants.


    Shariq Akber

    It would totally depend on the targets industry, capabilities of the internal team and the internal teams experience in the acquiring indsutry


    Kent Anderson

    I agree that a good internal team is needed, but the consultant brings the experience of having run the process multiple times to the table. The consultant knows all of the mistakes that can be made; in other words she or he has “been there and done that” and thus the consultant team compliments a good internal team.


    I have a case of this situation whether we hire consultant or not:
    1. If that company we already there but minority want to be majority I think no need to hire consultant
    2. If our team have capabilities and the company is quite small with no complex DD that also no need to hire
    3. But when we want to acquire large company with complex and many countries footprint with different languages, regulatory and legal system totally we need to hire a consultant that also have capabilities and access to the countries.




    It may also depend on the entity that you are acquiring. In the instance of acquiring a privately held company that does not have any audited financials, you may want to enlist a firm to provide a quality of earnings report.


    KH Tai

    Ideally, only a selected few from the target’s internal team should be involved with the DD or acquisition process.
    Having too many internal staff members working on or know about the deal could result in unnecessary rumours about the target company, create feelings of uncertainty with regards to the target company’s future, and less time dedicated to the target company’s day to day operations, having an external consultant involved would mitigate these issues.


    Gregory Weisser

    Involving consultants/advisors is (as mentioned here already) very dependent on the size and complexity of a deal, are more jurisdictions involved, does the language is a barrier. However, i am a big fan and also from my experience having a mix of internal resources and (some) advisors involved.
    Very technical topics within a DD which you can’t cover internally and might bear a huge risk (e.g. tax implications) i would always go with external help.



    I agree with all of the above. If the company has the internal capacity then they should use it, but they should also be aware of their own shortcomings/ blind spots and seek external help where appropriate.

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