Three Opportunities For M&a Due Diligence
The most important aspect of investigating and evaluating a potential merger & acquisition is due diligence
. Due diligence explores the details behind the company to help you become fully informed about the targets financials, business model, internal systems, profitability, key operational data, relationships, and other key factors that will assist you in making an informed decision about your investment.
Mergers and acquisitions due diligenceis designed to protect your interests by providing objective and reliable information on the targeted acquisition. Three strategic times to perform
M&A due diligence include pre-acquisition, post-acquisition and sell-side.
Pre-Acquisition Due Diligence
Pre-Acquisition due diligence should begin with identifying a senior management staff member who will assist with management buy-in for the due diligence process and facilitate communication of key issues across all functional areas potentially affected by a new acquisition such as business process owners, legal counsel, the board and its committees and outside consultants.
Before completion, a pre-acquisition due diligence checklist should have addressed a prospective subsidiarys control and risk mitigation posture relative to the acquiring company expectations, whether unmitigated key business risks, such as the absence of a repeatable financial institution Allowance for Loan Loss methodology, may adversely influence the acquisition decision, the estimated effort required to implement missing controls as a factor in establishing the acquisition price, the compatibility of legacy and outsourced systems with acquiring company systems and the impact of the potential acquisitions control posture on post-acquisition due diligence.
Post-Acquisition Due Diligence
Post-acquisition due diligence helps identify unmet initial business plan goals, allowing the acquiring company to take corrective action before incurring substantial losses. Key components of effective post-acquisition due diligence include a transition manager, a business process and control expert, an initial comprehensive business process, a control review and an annual, rated audit.
Throughout the first few months after acquisition, the business process and control experts and transition manager should employ a supportive, consultative approach toward the acquired company with a focus towards implementing the items detailed in an acquisition plan.
Sell-Side Due Diligence
Prior to selling an acquisition that did not work out, sell-side due diligence should be performed. Sell-side due diligence is similar in nature to pre-acquisition due diligence and prevents other companies from rejecting the deal if issues arise.
Sell-side due diligence should result in a report that identifies key aspects of the due diligence performed, a final sales price, issues that could substantially affect the sales process and recommendations to help mitigate those issues.
A strong due diligence process is critical to ensure that the acquirer is fully aware of all aspects of the deal and provides access to vital intelligence that is used to negotiate the final price and integrate the acquired company more effectively.
To find out more about
mergers and acquisitions due diligence, go to Proformative.com today to learn from finance experts and get involved in Proformative.coms finance, accounting and treasury-related groups and forums.
Proformative is a free, open and independent community of corporate finance, accounting, treasury and related professionals interested in finding professional resources, sharing knowledge, and getting work done. For the most comprehensive finance forum on the web, explore Proformative.com.
by: Bian Reed
Skin Care Makeup Without Blues How To Control Tenants In Your Rental Buildings Future Trends In Enterprise Collaboration A School Visit To The Planetarium The Upkeep With Four Valid Regarding Methods Diesel-powered Turbocharger Network Support For Computer Network Topology Problems Enjoy An Amazing Journey Of Royal Rajasthan Second Hand Cars In Your Budget U.s. Laws Governing M&a Bill Hionas Urges Investors To Take A Look At History Like Child, Like Doll A Glance At Car Donation How To Utilize The Motor Turbo Properly For The Cars