Streamline Sales Due Diligence for Management

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The due diligence process is stressful, time-consuming and intensive for BOTH buyers and sellers. However, it’s also absolutely critical to a successful merger or acquisition. Why? The investigative process conducted during an acquisition gives both parties the opportunity to validate assumptions about each other. And it’s exceptionally important for an acquirer to fully understand the company it’s purchasing. Due diligence provides insight into the target business’s revenue and profit claims. Buyers should seek to identify risks, liabilities and business problems before finalizing the transaction. A thorough buyer will also evaluate a seller across all areas of the business, including finance, operations, customer satisfaction and overall risk. A rushed or inadequate due diligence process has its consequences: Research suggests as many as 90% of acquisitions fail to meet their pre-acquisition goals. If you want to be sure that you’re getting a comprehensive view of a company before a merger or acquisition, here’s a tip: Make sure to look at the books, of course, but don’t forget to assess the culture and people involved as well. A common issue in M&A is that buyers have key assumptions about the seller. However, those are not always communicated to the newly-acquired company. In the due diligence process, key merger assumptions can be tested to make sure everyone is onboard – increasing the chances of M&A success.