One of the challenges of due diligence is that you often do not have access to all the data. Of course you want to know every last detail about the acquisition prospect so you can make the best decision. Unfortunately, the real world is never perfect. The prospect may have an incomplete or no record of the requested information or may be unwilling to share in-depth details.
In these situations, you must focus on obtaining the information that is critical to you. Think back to your one reason for acquisition. Your acquisition strategy should drive your integration strategy and the information you collect in due diligence. For example, if your strategy in acquiring the seller’s organization is to add a new technology, most of your due diligence and integration questions should be focused on technology. You may not be as concerned about gathering in-depth information on their sales department.
Quite frankly, getting all the information is unrealistic. And even if you did have access to every last detail, you have to remember that some of them are more valuable to you than others. It’s important to establish priorities and focus on what matters to you.
Due diligence will go on forever…if you let it. We once had a situation where the client had been in due diligence for over a year. At that point you have to ask yourself, “Do you really want to do a deal?” Letting due diligence drag on for months and years is can be tiresome and pointless. If due diligence lasts too long people start getting frustrated and momentum dies down. You need to strike the balance between thorough and exhaustive.
Remember, due diligence is not an academic exercise. Your purpose during due diligence is not to find 100 percent of the data for the sake of information gathering. The goal of due diligence is to learn enough about the company so you can properly evaluate it and decide if an acquisition makes sense.