One of my Students asked me to explain the importance of the Due Diligence process in their mergers and acquisitions (M&A) transaction.
Here are a few things to think about as you look at acquiring a business for yourself.
Due diligence is an essential part of the M&A process, yet many organizations still overlook its importance. In a recent survey, it was found that nearly 40% of mergers and acquisitions that fail, fail due to poor due diligence. Here’s why DD is so important:
Identifying Risks
Due diligence allows you to identify potential risks and liabilities associated with the target company.
Valuing the Target
It helps you understand the target’s financial and operational performance and determine a fair price.
Improving Decision Making
Due diligence provides you with the information you need to make informed decisions about the merger.
Protecting Your Business
By conducting proper due diligence, you can reduce the chances of making a bad investment and protect your business.
If you’re looking to learn more about the mergers and acquisitions process and what I’m looking out for when I buy a business, email us at Michael@MichaelByars.com.
