Due diligence is an essential element in ensuring that a merger or acquisition is logical for the new owner. This involves looking into the financials of the target company and looking into a host of other issues to make sure that the deal is a good one. Due diligence can be a long and exhausting process. It’s important to work with a dynamic group of experts from various business functions.
The first step in due diligence is to review general documents and records to determine the structure of the business from an organizational perspective. This involves examining the ownership and whether there are any regulatory or conformity concerns. It’s also important to consider the company’s management and culture.
Due diligence also includes evaluating the validity of key business processes and their documentation. This focuses on how frequently business process tests are carried out, and whether the documents related to these tests are updated frequently. It’s also important to assess whether the business is prepared for sudden changes in its operations. This means knowing how employees will be supported as well as their ability to adapt to the new business model.
It’s also crucial to analyze the efficacy of escalation processes. This means identifying ways to spot, report and address issues and also ensuring that third-party vendors maintain their own escalation protocols. This is essential to prevent problems that could affect your business, particularly in highly regulated industries.