Does onsite visit really helps in Due Diligence?
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Onsite visits can be a game-changer in due diligence, offering a firsthand look at a company’s operations and uncovering critical information that might otherwise go unnoticed. In-person interactions with key personnel provide an opportunity to directly assess their skills, experience, and commitment to the successful integration of the two companies.
Onsite DD adds a layer of assurance and provides a more comprehensive understanding of the target company. The insights gained from being physically present at the business can confirm or challenge findings from documentation and help identify risks or opportunities that may otherwise go unnoticed.
In my experience, onsite visits are necessary to fully understand the target company and verify the targets data presented in the data room. This is specifically important when the target company is a manufacturing company with highly complex processes. Understanding manufacturing maturity can only be evaluated by being on site. Recently launched R&D programs need to be evaluated for volume scale up and the capital needed to meet market volumes.
Onsites can indeed be very helpfull. Especially for the cultural fit and creating trust between the two parties. You can actually see how people behave, react and see if that fits with your own organization.
I believe on-site visits add tremendous value in the due diligence process. It’s difficult to assess the culture of a company unless you have walked their halls. As stated in the above posts, it also helps trigger other potential due diligence items. Additionally, the time spent with management allows for a more thorough assessment of their style and competence, something that can’t always be assessed with video conference calls. I also believe the additional face-to-face time helps build the relationship and familiarity that can be helpful in the negotiation process as you navigate the finer details of the purchase agreement as you approach closing.
From my own experience, onsite visit is important in due diligence. For deals involving hard assets (e.g. wind farms, office buildings, manufacturing plants, sales branches), onsite visit helps in assessing the real condition of the equipment. In addition, onsite visit is an opportunity to assess the people of the target company (management team and onsite employees). Quality of people, company culture are often intangible items that cannot be fully captured through data room. Onsite visit may also include a face-to-face demonstration of technology, capabilities or products, which is extremely useful for buyers and buyers’ advisors who may be unfamiliar to the sector. Lastly, though unrelated to due diligence, onsite visit sends a signal to the seller on the seriousness of buyer in making the deal.
Yes, it does.
Sometimes, pictures of facilities or even compliance with ISO norms are not enough to identify, in particular, potential risks (short term or long term) for production, environmental risks (in my industry, this is particularly relevant).
Discussing with employees on site can also help to understand how the plant is managedI believe that on a Cultural fit perspective, it is essential! It will give you the opportunity to observe and talk to people, and feel the overall vibe and culture. There’ s nothing better than that to really assess the cultural fit of a potential deal.
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