October 22, 2019 at 1:52 am #97481
In your own experience, which DD is the hardest one to exercise? why? and have you considered yourself making a mistake so far?October 22, 2019 at 9:57 am #97515
The Financial Due Diligence can be quite complex, especially when accounting in relation to one entity is done and kept as part of the accounts of a separate entity, with its own operations.
I have not personally performed a Financial DD, but I have been greatly exposed to one in particular, which was very challenging, even for the experts performing the DD. Errors in assumptions can occur when there is a lack of information/explanation.March 20, 2020 at 3:38 am #108747
I would say the hardest due diligence is commercial due diligence as commercial due diligence is extremely important for deal strategy, deal execution and aligning with the company’s corporate strategy! The biggest mistake that I can see is – balancing timing of deliverable with 100% accuracy.April 1, 2020 at 3:00 pm #109212
For classical DD, professionals that perform such engagements are usually following some ethical code for professionals that would provide some assurance, that cases of conflict of interest should be properly identified and risk is mitigated (e.g. accountants, lawyers CPA’s etc).
For other DD areas, certainly you should explicitly include contract clauses in your agreement with regard to confidentiality, breach of independence etcApril 1, 2020 at 3:01 pm #109213
To my opinion, to answer this question, on must have tried to perform all of the in order to have a personal experience. For me, financial DD and Tax DD are more familiar and manageable as it happens to work as CPA for more than 20 years and Head of international taxation in the last years. It is not the same of legal DD which requires particular multidisciplinary knowledge (from common law to corporate law and labor law) in order to review commercial agreements, license agreements, legal disputes, knowledge of case law etc. Close to legal DD you could put also IP as well as environmental DD due to their close relation on legal issues and legal approach required. IT DD could be difficult for someone without specific skills and knowledge but it is easier to be performed by specialist (e.g CISA certified people). Finally commercial due diligence should be the most intriguing and probably requires the most interdisciplinary approach from financial accounting to management accounting, marketing etc. So I would conclude that commercial DD should be the most difficult
You must be logged in to reply to this topic.