M&A Due Diligence

Importance of Due Diligence in M&A

Due diligence is a critical process in mergers and acquisitions that involves a thorough investigation of the target company to uncover potential risks and opportunities, while M&A integration is the process of combining the two entities post-transaction. Effective due diligence sets the stage for successful integration by informing the integration strategy, identifying potential synergies, and highlighting areas that require attention, such as cultural differences, operational inefficiencies, or financial discrepancies. A well-executed integration plan, informed by comprehensive due diligence, helps ensure a smooth transition, minimizes disruptions, and maximizes the value of the combined organization.

Due Diligence Overview

Pre-Close Data Sharing

Sales & Operations Due Diligence

HR Due Diligence

Financial Due Diligence

IT Due Diligence

Risks

Leadership Assessments

Due Diligence Overview

M&A Due Diligence Overview

M&A Due Diligence Overview

M&A Due Diligence 41-Slide PowerPoint Presentation.
M&A Due Diligence: 30 Common Red Flags

M&A Due Diligence: 30 Common Red Flags

  1. Does the company appear to manipulate reserve accounts in order to smooth or enhance its reported earnings?
  2. Is the internal audit team subjected to significant scope restrictions?
  3. Are a large proportion of monthly sales completed during the last few days of each month?
  4. Are any employees of such importance that their departure for any reason would jeopardize the existence of the business?
  5. Is there evidence of continual changes in accounting methods?
7 Common M&A Due Diligence Mistakes

7 Common M&A Due Diligence Mistakes

PowerPoint presentation on seven of the most common M&A due diligence mistakes.

Pre-Close Data Sharing

Pre-Close Integration Data Sharing Rules

Pre-Close Integration Data Sharing Rules

Table of Contents

  • General Prohibitions
  • Document Creation
  • Information Exchanges
  • Unilateral Sales Calls (Acquirer)
  • Joint Sales Calls (Acquirer and Target) . . .
Clean Team: Competitively Sensitive Information

M&A Clean Teams: Competitively Sensitive Information

Confidential Information

Deal Team 

  • Industry reports or analysis prepared by third parties
  • General information regarding current products and services
  • Historical aggregated financial data, including aggregate revenues
  • Information regarding the organisation of systems and processes (e.g. "back office" systems and processes like billing, IT and accounting). . . .
What is Gun Jumping and How to Avoid It

What is Gun Jumping and How to Avoid It

CONFIDENTIALITY REMINDER

  • Our companies are still operating independently
  • All work associated with the M&A integration teams should be considered confidential
  • Please do not share details of our integration work outside this team   
  • The M&A integration lead team will coordinate communications to both organizations as needed …

Sales & Operations Due Diligence

Sales, Marketing and Operational M&A Checklist

M&A Due Diligence Checklists - Sales, Marketing, and Operations

Comprehensive 95-page sales, marketing, and operation guide to conduct thorough, effective M&A due diligence.
 

One of the most difficult aspects in business evaluation is understanding and justifying forecasts of future revenues. Section I of this guide provides a micro-style analysis of marketing and sales. The section asks numerous specific questions about twenty-five company functions that, together, address the ability of a business to gain and retain profitable customers.

Sections II through VI help the analyst develop a macro ...

HR Due Diligence

M&A HR Due Diligence: Side-by-Side of the HR Programs

M&A HR Due Diligence: Side-by-Side Comparison of the HR Programs

11-page comprehensive comparison of HR Programs of the Acquirer and Acquiree in 125 Areas.

The programs are grouped into the following categories:

  • Defined Benefit Plans
  • Retiree Medical Plan
  • Defined Contribution Plan
  • Health And Welfare Plans
  • Career Development
HR Due Diligence Tool

M&A HR Due Diligence Tool

9-page list of data to gather to assess HR

Identify potential synergies/opportunities in these categories:

  • Culture
  • Management Team
  • Employees
  • Compensation and Benefits
  • Pensions
  • Training
  • Recruiting ...

 
M&A Human Resources Due Diligence Checklist

M&A Human Resources Due Diligence Checklist

7-Page HR Due Diligence Checklist

  • Number of full-time employees in business (Exclude part-time, contract, and temporary employees).
     
  • Employee names, job titles, and compensation.
     
  • Total number of employees exempt from overtime: sales, administrative, professional and executive employees.
     
  • Total number of hourly full-time (nonexempt) employees. Seasonal variations? Skill levels within each group?
     
  • Total number of employees classified as temporary. Circumstances and conditions employees considered temporary.
     
  • Total number of contract employees.
     
  • Use and total number of part-time employees.
     
  • Significant increases or decreases during the past year in employee categories?
HR Due Diligence Information Request Checklist

HR Due Diligence Information Request Checklist

8-Page HR Due Diligence Checklist:

  • Organization charts and a description of management structure, including principal functional areas, headcount by area. and reporting relationships.
     
  • Job descriptions for all major job categories and minimum education, experience, and skill levels required for each.
     
  • Current pay ranges and recent increases. 
     
  • List current personnel (including lists of officers and directors) with hire dates ... 
178 HR and Legal Due Diligence Questions 

Human Resources and Legal Due Diligence Checklist

Checklists for each of these categories: Employees, Unions, Compensation and Benefits, Retirement Plans, 401(k)s, and ESOPs, Culture, and Legal and Regulatory.

Employees

1. Does this business have a human resources department? If yes, how is it staffed and what are its responsibilities? To whom does the senior human resources executive report? Are human resources personnel involved in significant business decisions?

2. What is the number of full-time employees? (Exclude part-time, contract, and temporary employees.) Subdivide the total by country and business unit in which they are employed. Request lists, if needed, ...
Human Resources M&A Due Diligence

Human Resources M&A Due Diligence

10-slide PowerPoint presentation on Human Resources M&A Due Diligence

Financial Due Diligence

Financial M&A Due Diligenceban

Financial M&A Due Diligence

13-slide PowerPoint presentation on M&A financial due diligence and objectives.
Financial Due Diligence Request List

Financial Due Diligence Request List

Excerpt from 4-Page Financial Due Diligence Request List:

  • Quarterly income statement for most recent two quarters
  • Financial projection for next four quarters
  • Amount of forecast guaranteed by contract
  • Most recent business plans
  • A copy of tax returns for the last four years
  • All tax distributions made
  • Past two years’ audit results      
  • Last four years of financial statements
  • Detailed analysis of each balance sheet account
  • Debt instruments, indentures, loan agreements and agreements on documents relating to lines of credit ...

IT Due Diligence

Information Technology M&A Due Diligence

Information Technology M&A Due Diligence

Information Technology M&A Due Diligence 21-slide PowerPoint Presentation.
M&A IT Due Diligence Checklist

M&A IT Due Diligence Checklist

Excerpt from IT Checklist

  • Systems for which management is dissatisfied. Corrective measures taken or planned
  • Employees with exceptional skills in writing software, developing systems, or troubleshooting problems
  • Systems manual maintained, up to date, and followed
  • List of all information systems utilizing computers and their function in the business. Type of machines, software, their age, number, and location of units
  • Backup and disaster recovery procedures and programs
  • Level of difficulty anticipated to integrate the company’s databases into the buyer’s systems. . .

Risks

Answers to FAQS on Post-Merger Integration Risks

Answers to FAQS about Post-Merger Integration Risks

Answers to questions such as:

  • What is usually the most dangerous phase of M&A integration?
  • How can you tell if a merger integration is being mismanaged?
  • What are the most common causes of M&A integration problems?
  • What is gun jumping and how to avoid it? . . .

 
10 Most Common Post Merger Integration Problems

10 Most Common Post Merger Integration Problems

These are the 10 most common post-merger integration problems that cause chaos, slow integrations, and frustrate management.

Leadership Assessments

The Case for Leadership Due Diligence in M&A

The Case for Leadership Due Diligence in M&A

Traditionally the merger due diligence process has focused on legal and financial issues—e.g., contractual matters, litigation points, economic and fiscal considerations, etc. Obviously that’s an important exercise.

But when mergers fail, as they too frequently do, the odds are it reflects a sloppy job ...
Senior Vice President Talent Assessment

Talent Assessment of Senior Vice President

Results from Assessment of SVP (name of executive and details have been changed).
Chief Operating Officer Talent Assessment

Talent Assessment of Chief Operating Officer

Results from Assessment of COO (name of executive and details have been changed).