Due Diligence during Company Mergers & Acquisitions

Dossier / Travail , 2006 , 28 Pages , Note: 1,0

Gestion d'entreprise - Direction d'entreprise, Management, Organisation

This term paper focuses on the idea and structure of the due diligence process and its applicability during company merger & acquisition (M&A) activities. Unfortunately 40% - 85% of company M&A still do not live up to the acquirers’ expectations or even fail completely due to information asymmetries. The analytical approach of the due diligence process represents a way to overcome gaps in company analysis and evaluations.
Initial point of this paper is a description of the basics in the process of company M&A and the main reasons for their failure. The due diligence is an approach to apply best practices out of the financial market routine in order to overcome these critical problems. In this light the different operational steps of the due diligence process as well as its most commonly functional applications and their specific attributes are examined.
It is shown that information is the paramount groundwork for a representative company assessment. Due to reoccurring analysis failures during contemporary M&A activities the due diligence concept is a useful approach to avoid imprecise handling of information.

Table of Contents

• Preface
• Contents
• List of Abbreviations
• List of Figures
• 1 Some Definitions on Mergers & Acquisitions
• 1.1 General Types of M&A
• 1.2 Goals of M&A
• 1.2.1 Market Value oriented Strategies
• 1.2.2 Non-Market Value oriented Strategies
• 1.3 The Chronology of M&A
• 1.3.1 Pre Contract Phase
• 1.3.2 Negotiation and Closing Phase
• 1.3.3 Post Contract Phase
• 1.4 Success Measurement after M&A
• 2 The Due Diligence Concept
• 2.1 Origin of the Due Diligence Concept
• 2.2 Functions of a Due Diligence
• 2.2.1 Overcoming Information Asymmetries
• 2.2.2 Efficient Analysis and Evaluation
• 2.2.3 Groundwork for Decisions and Pricing
• 2.2.4 Exculpation and Warranties
• 2.3 A Definition of Due Diligence
• 3 The Due Diligence Process
• 3.1 Information Resources
• 3.2 Planning
• 3.3 Team
• 3.4 Realization
• 3.5 Documentation
• 4 Types of Due Diligence Reviews
• 4.1 External & Basic Due Diligence
• 4.2 Strategic Due Diligence
• 4.3 Financial Due Diligence
• 4.4 Legal Due Diligence
• 4.5 Tax Due Diligence
• 4.6 Marketing Due Diligence
• 4.7 Human Resource Due Diligence
• 4.8 Cultural Due Diligence
• 4.9 Organizational & IT Due Diligence
• 5 Concluding Remarks
• Bibliography

Objectives and Key Themes

This paper analyzes the due diligence process and its application during company mergers and acquisitions (M&A). The objective is to provide a comprehensive understanding of due diligence as a strategic tool for overcoming information asymmetries, facilitating efficient analysis, and establishing the groundwork for informed decisions in M&A transactions. This paper explores the origins and functions of due diligence, delves into the operational steps involved in the process, and examines the different types of due diligence reviews commonly employed.

• The increasing importance of M&A in the globalized business environment.
• The due diligence process as a means to overcome information asymmetries and ensure informed decision-making.
• The diverse functions of due diligence, including efficient analysis, evaluation, and risk management.
• The key steps involved in the due diligence process, from information gathering to documentation.
• The different types of due diligence reviews, including financial, legal, and strategic assessments.

Chapter Summaries

Chapter 1 provides an overview of company M&A, including different types of mergers and acquisitions, the goals pursued in such transactions, and the various phases involved in the M&A process. It also discusses the factors that contribute to success or failure in M&A deals.

Chapter 2 delves into the concept of due diligence, examining its historical origins, its functions in mitigating information imbalances, and its role in enabling efficient analysis and evaluation. It also establishes a clear definition of due diligence.

Chapter 3 focuses on the due diligence process itself, exploring the sources of information used, the planning required, the necessary team composition, the realization of the process, and the final documentation generated. This chapter emphasizes the importance of a structured and methodical approach to due diligence.

Chapter 4 explores the different types of due diligence reviews commonly applied in M&A transactions. It highlights the specific attributes and objectives of each type of review, including external, strategic, financial, legal, tax, marketing, human resource, cultural, and organizational due diligence.

Keywords

Key terms and concepts central to this paper include company mergers and acquisitions, due diligence, information asymmetry, strategic decision-making, financial analysis, legal compliance, risk management, and value creation.

• Université: BVL Campus gGmbH
• Note: 1,0
• Auteur: Boris Beckmann (Auteur)
• Année de publication: 2006
• Pages: 28
• N° de catalogue: V63371
• ISBN (ebook): 9783638564359
• ISBN (Livre): 9783638668576
• Langue: anglais
• mots-clé: Diligence, Company, Mergers, Acquisitions