Due diligence is a vital part of ensuring that a merger or acquisition is beneficial to the new owner. This includes examining the financials and other aspects of the target company to ensure that the deal is sound. Due diligence can be a long and exhausting process. It is essential to work with a an expert group from different business functions.
The first step of due diligence is to examine general documents and records to determine the structure of the business from an organizational standpoint. This includes assessing the ownership and if there are any compliance or regulatory concerns. It’s also important to be aware of the company culture and the leadership.
Due diligence also involves assessing the credibility of key business processes and their documentation. This is focused on the frequency of business process testing and whether the documentation relating to these tests are regularly updated. It is also crucial to determine if the company is prepared for unexpected changes to its operations. This is a way of looking at how employees will be supported and their capacity to adapt to the new business model.
In the end, it is essential to assess the effectiveness of escalation methods. This involves identifying the best way to spot, report and resolve problems and also making sure that third-party vendors have their own escalation procedures. This is essential to prevent problems that could affect your business, especially in highly regulated industries.