During Due Diligence, our company identifies potential synergies that can be achieved post-close. Many times, Day 1 activities that allow a more granular look at business operations have altered our view of the priorities of these synergies. Day 1 activities have also been known to change our initial synergies and shape them into something that looks completely different than the Due Diligence evaluation.
How many of you have been surprised by Day 1 findings to the degree of reshaping many identified synergies? Has your company been successful with Due Diligence evaluations to where you did not have to divert/re-shape at all?
In one situation our findings in Day 1, made me change the look of the project completely. What I thought it was going to be an easy integration became a nightmare. My experience tells me that DD focus too much on financials, a little bit on strategy and 0 on the rest. It is in the rest where you find Day 1 surprises.
We had an instance where we had underestimated the need to conduct a full Cultural DD which resulted in a whole host of problems on Day 1 & beyond – particularly around how the work was performed by the Target & the management behaviors that existed resulting in significant abrasion between the Target’s employees & our own. In the end, significant synergy opportunities were missed & it was a 2-year nightmare post-close.
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