Typically, outside counsel to the acquirer directs the due diligence review with help from a team of professionals employed or retained by the acquirer. As mentioned, the review has financial, operational, and legal aspects. Each of these parts can benefit from specialized attention. The professionals conducting these investigations each have separate and distinct responsibilities, although they may, and indeed should, communicate with one another.

The financial statement review requires attention from the acquirer’s financial and accounting personnel, such as the chief financial officer and, if the company has one, the chief internal auditor. The operations review will involve risks inherent in the company’s conduct of its business—for example, weak defenses against cyberattacks.

The legal compliance review requires external and, if available, internal counsel. The acquirer may also bring in asset appraisers, cybersecurity experts, environmental experts, and a host of other professional talent during the review.

The party directing the review should be clear from any conflicts of interest. Any party paid a contingency for the completion of the transaction—for example, an investment banker having such an arrangement—may have a conflict of interest, and that fact should be considered in the acquirer’s decision as to who should direct the review. Also, if a firm has a financial relationship or consulting engagement with the company it is studying, it may also have a conflict of interest with respect to the transaction. This would include any audit firm that has relationships in addition to the audit that may suggest lack of independence.