Most will agree that doing M&A deals is a science and an art. It usually requires teamwork, discipline, determination and resilience to see through an acquisition or a divestment respectively.
The successful closing of a M&A deal and the successful post-closing integration critically depend on (i) strong business rationale of the transaction; (ii) availability of resources (not only finances but also executive management time); (iii) speed and quality of decision-making (there will always be one or two decisive moments when the deal will hang in the balance); (iv) preparation (prior market intelligence, planning, allocation of resources etc.) and quality due diligence.
Currently due diligence is all about speed (real time reporting to the client and addressing the issues identified) and brevity (red flags, material issues only, executive summaries, no time for full due diligence). Yet, here’re some tips from Gartner’s M&A Avoiding Pitfalls Report:
“Incomplete due diligence can lead to major M&A execution risks, such as substantial cost and time overruns for business integration and missed synergy targets.
All relevant executive leaders should be involved in due diligence to identify and address potential integration risks early and mitigate any unforeseen issues as they occur.
For each area of due diligence (i.e., finance, HR, IT, tax, commercial, legal), teams should prepare reports that indicate the quantitative and qualitative risks that must be (1) mitigated prior to closing, (2) factored into the purchase price and definitive agreements or (3) incorporated into postclosing integration actions.”