DD – Interviews
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How important are internal interviews with staff of a potential target company and how much reliance & trust is put on their answers.
I believe the interviews uncover hidden potential risks which are not included in the books. However, there are ways to verify the information provided during the interviews.
My thought is that they can be effective in validating information provided by others and in determining who key employees are and retention requirements.
Internal interviews with the staff of a potential target company are critical. They provide insights into the company’s culture, operational challenges, and employee satisfaction, often not reflected in financial statements. However, it’s essential to approach these interviews with a balanced perspective. While staff members can offer valuable firsthand information, their responses may be influenced by personal biases or concerns about the acquisition. Cross-referencing their feedback with other due diligence findings and third-party assessments ensures a comprehensive understanding of the target company. How have you found the balance between relying on internal interviews and other due diligence methods?
In my experience, interviews and presentation sessions with senior management and key personnel of a target are helpful to gain insights that may not be readily discernible from “hard” data presented in due diligence materials, for example, business strategy, trustworthiness and organisation culture. I would also use such sessions as an opportunity to assess the quality of these personnel. However, targets are typically reluctant to allow a potential buyer access to employees generally, because of the impact to day-to-day work / operations and because doing so risks unsettling the workforce.
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