When to call off due diligence?

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  • #114669


    Participant

    In the process of conducting due diligence, if and when there are indicators that the target company is less than ideal in any aspect of the due diligence (be it HR, tax, legal, IT or financial), at which point should an acquirer decide that it is pointless in moving on with other aspects of due diligence and calling off the deal altogether?

    #114893


    Participant

    Hi,
    it depends how big the problem is and whether or not to adjust it in the price. Advisors will issue more than 1 report, so, it is better to wait untill DD is completed and then re-negotiate the price.

    #114950


    Participant

    If the problem is HR-related, you may be able to come to that conclusion sooner than later. Unless you are buying the company for its IT or other valuable assets that do not depend on successful integration of the teams or even semi-independent operation of the target by its personnel, early indications of poor fit between the teams should be heeded and may save a great deal of time and money pursuing other DD areas.

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