M&A Due Diligence Overview

Due Diligence Factors to Consider

  • The Party with the superior knowledge will be in the best position to:
    • Negotiate the shifting of risks and achieve the negotiation advantage
    • Quantify the probability of a particular risk
    • Determine risks that they might be willing to assume
    • Accept some risk, concede others
    • Shift the most costly risks to the other party
  • Most bad information usually comes to light – absent fraud. Disclosure is a matter of timing.
  • As a result, Sellers (with the superior information advantage) want to maintain that advantage – yet by doing so – it may adversely affect credibility or negotiating position with a Buyer.
  • The Seller’s superior knowledge will inevitably diminish throughout the process.
  • A good strategy is to put in your own diligence team before the transaction starts so as a Seller you can respond to the diligence requested and control the procedures and processes.
  • The usual result – is a price reduction or an expanded indemnity.
  • The timing of such disclosures can be very important.
  • Buyers react badly to late disclosures – and the consequences can be great.
  • Often disclosure is staggered to prevent disclosure of sensitive information.
    • You may see a “high or general” level of disclosure for solicitations (or expressions) of interests followed by more detailed disclosures after bidders or buyers are narrowed.
    • Sellers will be even more reluctant to disclose information to counter-parties who may be competitors (and will stage those disclosures as well) to guard against unwanted disclosures.


Slide titles:


M&A Due Diligence Overview
M&A Due Diligence Overview
Due Diligence – What is it?
Due Diligence – What is it?
Due Diligence – But it is also…
Due Diligence – But it is also…
Due Diligence … A Defense
Due Diligence … A Defense
Due Diligence … A Defense (continued)
Due Diligence … A Defense (continued)
Due Diligence ... A Defense (continued)
Due Diligence ... A Defense (continued)
Due Diligence – 3 Objectives
Due Diligence – 3 Objectives
Factors Affecting Diligence
Factors Affecting Diligence
Factors Affecting Diligence (continued)
Factors Affecting Diligence (continued)
Factors Affecting Diligence (continued)
Factors Affecting Diligence (continued)
Factors Affecting Diligence (continued)
Factors Affecting Diligence (continued)
Due Diligence - The Exercise
Due Diligence - The Exercise
Running the Diligence
Running the Diligence
Running the Diligence (continued)
Running the Diligence (continued)
Due Diligence – Main Categories
Due Diligence – Main Categories
Background Information
Background Information
Background Information (continued)
Background Information (continued)
Business Due Diligence
Business Due Diligence
Business Due Diligence (continued)
Business Due Diligence (continued)
Business Due Diligence (continued)
Business Due Diligence (continued)
Business Due Diligence (continued)
Business Due Diligence (continued)
Financial Due Diligence
Financial Due Diligence
Financial Diligence (continued)
Financial Diligence (continued)
Financial Diligence (continued)
Financial Diligence (continued)
Accounting Due Diligence
Accounting Due Diligence
Accounting Due Diligence (continued)
Accounting Due Diligence (continued)
Legal & Regulatory Due Diligence
Legal & Regulatory Due Diligence
Legal & Regulatory Due Diligence (continued)
Legal & Regulatory Due Diligence (continued)
Legal & Regulatory Due Diligence (continued)
Legal & Regulatory Due Diligence (continued)
Corporate Governance
Corporate Governance
Corporate Governance (continued)
Corporate Governance (continued)
Special Considerations - Offerings
Special Considerations - Offerings
Special Considerations – Offerings (continued)
Special Considerations – Offerings (continued)
The Diligence Report
The Diligence Report
The Diligence Bring-Down
The Diligence Bring-Down
The Diligence Bring-Down (continued)
The Diligence Bring-Down (continued)
Other Considerations
Other Considerations
Other Considerations (continued)
Other Considerations (continued)
Diligence to Closing Checklist
Diligence to Closing Checklist
Diligence to Closing Checklist (continued)
Diligence to Closing Checklist (continued)
Post-Closing Diligence
Post-Closing Diligence