During formal due diligence, which typically begins after signing the letter of intent, you gain access to in-depth information and begin taking a closer look at the acquisition target. Traditionally the primary purpose of this stage of the M&A is to identify significant risks that could impact the terms of the deal or put it …
Tag: due diligence
How to Measure Company Culture
Culture is an important part of an organization, but it can be difficult to define. Unlike other areas, such as finance and operations, which have concrete metrics like revenue, EBITDA, and number of employees, quantitatively measuring culture can be challenging. Leaders often rely on their “gut” to understand another company’s culture, but this leaves an …
How to Conduct Functional Due Diligence and Maintain Seller Confidentiality
Q: How often are you able to bring together both buyer and seller functional personnel during due diligence? Some sellers might be sensitive to confidentiality and not open to bringing their personnel into the fold. A: When conducting due diligence, we advocate a functional approach, where leaders from the buyer’s organization meet with the seller’s. There …
Due Diligence: When Do You Call Off the Deal?
Cultural due diligence is a critical task in the acquisition process. It exposes hidden problems and risks, but also may identify opportunities. However, if you do uncover red flags, you may need to reevaluate the deal. Sometimes you must simply call it off. We have walked away from a transaction when due diligence revealed a …
Your Role as Leader in a Successful Integration
Effective leadership plays a critical role in integrating companies following an acquisition. Challenges abound, for instance when disagreements arise between the executive team and the rest of the staff. How do you bridge the gap? Communicate painful decisions? Maintain calm during a period of change? As the leader of an integration process, you should: Be …
Are You Neglecting Company Culture in Acquisitions?
Culture can often be neglected simply because it is difficult to measure, especially when compared to hard facts such as number of employees or company revenue. After all, what constitutes a “good” culture? Definitions may vary from company to company and even among members of your own acquisition team. Despite this challenge, company culture should …
Make It or Break It: How You Can Avoid Culture Clashes in Mergers & Acquisitions
Culture clashes can make or break a deal. Just think about a few infamous deals that fell apart, such as the Time Warner-AOL merger in 2001. In Deals from Hell, Robert Bruner analyzes the reasons for failure in depth along, including examples of deals that failed due to cultural issues. In fact, cultural issues are …
Employees vs. Contractors ─ A Due Diligence Challenge
It seems as though the employee vs. contractor issue is popping up all over the news. Virtual assistant startup company Zirtual just fired over 400 employees by email because the company couldn’t sustain its payroll once it converted contractors to employees. The Wall Street Journal has also highlighted the many startups that are now grappling …
Aligning Buyer and Seller Functional Leaders in Due Diligence
Q: “What if the buyer and seller functional leaders do not match? How do you coordinate the two sides?” We take a functional approach to due diligence where we encourage your leaders from sales, marketing, finance, operations and other functional areas to meet with their respective leaders on the seller’s side. A functional approach ensures …
What Employees Really Think ─ Conducting HR and Organizational Due Diligence
People are critical to the success of your company, and it’s no different in the business you are acquiring. But how can you go beyond the surface and find out what employees really think? It is doubtful employees will be completely open and honest when asked point blank, “Do you like your job?” One of …
