Sell-Side Due Diligence Becomes More Important in Competitive M&A Landscape

Mergers

Sell-Side Due Diligence Becomes More Important in Competitive M&A Landscape

The rules of engagement are changing, but there are two things buyers and sellers can do to gain an advantage.

 

A recent article from Mergers & Acquisitions Magazine highlights a number of emerging trends in middle-market private equity transactions, including both a compression of the window for buyers to perform due diligence as well as in increase in the practice of performing sell-side due diligence before a company is put up for sale.

The article discusses some of the drivers behind these trends and the consequences, and two things both buyers and sellers can do to gain an advantage seem clear:

  • Sellers: Make sell-side due diligence a standard part of the pre-sale process and focus as much or more about proactively identifying and addressing potential deal-killers as about preparing a sell-side report.
  • Buyers: Make the most of the available window for due diligence. Instead of just focusing initially on quality of earnings and asset valuations where applicable, plan to address all aspects of the target that have bearing on the investment thesis up front.

These steps are more likely than not to require both an earlier and more comprehensive view into the company’s operations and the technology to support them, and these areas often are delayed within the scope and timing of both sell-side and buy-side due diligence, or excluded altogether. Don’t let surprises about operations and technology scuttle your next sale or kill your next acquisition. A little triage around operations and technology can go a long way to making divestitures and acquisitions a win for everybody.

The complete article may be found here.

Please contact us if you would like insight and assistance in effectively incorporating operations and technology considerations into your sell-side or buy-side playbook.