Get to Know Your Target via the Science of Due Diligence
By Jim Jeffries, Chairman of the M&A Leadership Council
As my good friend and co-founder of the M&A Leadership Council, Jack Prouty, says: “Due Diligence for the purchase of a company is much like the activities one undertakes when buying a home.” Simplistic? Yes, but also true in many ways.
You would not purchase a home without first getting an appraisal or inspection, would you? Of course not. You need to know if you are paying too much for the property and what kind of shape it is in. You also need to know:
- Are there any existing liens against the property?
- Has the property ever been damaged by fire? Flood? Storm?
- Who are the neighbors?
- Where are the nearest hospitals, grocery stores, schools, malls, restaurants, police and fire …?
We could go on and on. But at some point, you will need to make an offer, and you hope any issues or risks have been discovered and dealt with. It is the same with purchasing an existing business, except for one important difference—PEOPLE. When you buy a company, you are acquiring the people in the business, and that can change everything.
That’s why we talk about the Art and Science of M&A. The science side includes financial due diligence and its fundamental requirements to validate the current state and history of the business. But truly successful diligence also requires expertise in The Art of Due Diligence that goes beyond the numbers to determine the fit and future risks in each deal, and much of that hinges on the people.
Join us in July for The Art of M&A Due Diligence in San Diego to learn about the structure, tools and best practices for due diligence teams, with a special focus on the people issues. Our expert presenters draw from their years of real-world M&A experience to equip your team for success. Secure your spot today.