Initial Due Diligence

This topic contains 5 replies, has 6 voices, and was last updated by  Rochelle Ramos 1 week, 1 day ago.

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  • #111926

    Carolina Batista
    Participant

    Which department you think should run the initial due diligence (to look for the first red flags) before moving forward to a more detail analysis/DD?

    #111930

    Navdeep Singh
    Participant

    I believe that depends upon the business objective and the associated function to achieve the business objective. If the business objective is just to induce new technology e.g. Amazon acquired Zoox – then I think for them it is most important to understand R&D, software engineering, etc.
    In general, Finance, Legal should be the first one to run initial due diligence.

    #111962

    Shariq Akber
    Participant

    I understand it differs from acquisition to acquisition and the industry M&A is taking place. However in general I believe commercial DD could be the starting point.

    #112022

    Mandana Javaheri
    Participant

    It depends on the acquisition I would say but even then, I don’t believe just one department or function can do the initial DD. I believe as part of the initial DD, buyers should do financial, technology/product, sales/GTM process, and overall culture fit DD.

    #112329

    Eric Hubacheck
    Participant

    In technology, I firmly believe it’s a non-starter if the developers don’t green light it first. It should always be possible to view the specs for potential integration, they’ll be able to spot some flags immediately, such as if the technology itself is stacked well, written in the right language, and compatible with your product (if looking to integrate products).

    #112500

    Rochelle Ramos
    Participant

    Finance and legal should be involved from the beginning of due diligence. That said, depending on the type of company being acquired, different key personnel should be involved. For example, years ago I was involved in the acquisition of an escrow office. Finance and legal where involved immediately but we also brought in key escrow officers to determine if processes were compatible and cultures were in alignment. The financials showed for a successful acquisition, but being that escrow is a very relationship based environment, it was key to determine if the staff was likable and skilled in their profession in order to continue success.

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