Ignoring due diligence findings
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Dear Community,
I’m eager to know your opinion: Do you find that strategic buyers tend to overlook due diligence findings in M&A transactions more often than not? If so, what factors could contribute to this tendency?
A strategic buyer might choose to overlook certain issues if there is a concern that a competitor could acquire the target company, potentially strengthening a competitor’s position in the market. So you might take the risk to secure your position (eg preventing a foreign investor to enter your market)
I may not necessarily describe it as “overlooking” due diligence findings. It could be that a strategic buyer has assessed risks and is comfortable taking it on, for a variety of reasons. For example, a strategic buyer may well determine that the benefits arising from synergies outweigh potential (quantitative) risk. Another reason could be that a strategic buyer is aware of certain risks being the norm in a given industry or geography.
Anyway, in my experience working as external legal adviser and currently an internal deal counsel, I don’t think strategic buyers generally disregard due diligence findings. On the contrary, I find that they generally do a holistic assessment of risks and mitigating factors.
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