DD guarantee: due diligence is a key stage of mergers and acquisitions, and it's especially crucial to get this process right when economic conditions are uncertain. Stewart Meek explains how a thorough review, incorporating a well-trained 'virtual' team drawn from within the purchasing organisation, can be a genuinely value-adding activity.

Financial Management (UK) › Nbr. 2003, May 2003

Author: Meek, Stewart

Position:: Business Acquisitions

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Summary

Business Acquisitions

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Extract

DD guarantee: due diligence is a key stage of mergers and acquisitions, and it's especially crucial to get this process right when economic conditions are uncertain. Stewart Meek explains how a thorough review, incorporating a well-trained 'virtual' team drawn from within the purchasing organisation, can be a genuinely value-adding activity.

There is a school of thought that suggests the acquisition excesses of the internet boom years resulted from poor due diligence practice. But the reality is that the due diligence process starts only after the intention to purchase has been expressed--often with unbridled enthusiasm during the dotcom gold rush. If blame is to be attributed, it's possible that the findings of due diligence reviews were ignored and unwise deals were concluded regardless.

According to Denzil Rankine in Commercial Due Diligence (Pearson, 1999), the process simply "helps acquirers and investors to decide whether or not to commit their resources to a transaction". It has traditionally focused on financial...

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