Ultimate CEO Guide to Conducting Due Diligence for Mergers & Acquisitions
M&A transactions can be stressful - no doubt. Depending on what side of the table your on we wanted to put together a starter guide for you and your team to use as a Diligence List. This is no way represents a total diligence period but should give you some ideas for areas you maybe aren't thinking about currently.
M&A transactions can be stressful – no doubt. Depending on what side of the table your on we wanted to put together a starter guide for you and your team to use as a Diligence List. This is no way represents a total diligence period but should give you some ideas for areas you maybe aren’t thinking about currently. It goes with out saying this guide is for a CEO or the Founder of a company, which primarily aligns market strategy, where as your CFO and General Counsel should be running point on financial due diligence and the actual contractual obligations of the deal.
One of the first things to think about is a meeting agenda – this can be done even after many initial calls or meetings but will give you some framework to follow as the process continues. don’t be afraid to follow this agenda no matter how deep in the process you already are, starting back at the basics might reveal something.
- Get a All Team Member Org Chart
- Who are the key leaders of the company?
- Find out where all Key Team Member are located.
- Get all Key Team Member Backgrounds in detail.
- What would happen if key member X was hit by a bus?
- In the last 6 months what have been the drivers of growth?
- How big is just our market versus our combined market?
- How big is the total addressable market?
- Provide case study against 2 top competitors
- Why do you win? What is your win rate vs. each competitor?
- Why do you not win? I.E. Why do customers choose these competitors?
- What do you have for differentiation in the market? Technology? Product? Process? People?
- Why did you win the last time you took a customer from each?
- Why did you lose the last time you lost a customer to each?
Historical Overview & Growth
- What was the company’s original go to market strategy?
- How does that differ from your primary strategies today?
Capabilities & Technology Overview
- What kind of KPI does your technology use to determine if it is successful for the business?
- What type of security procedures do you have in place?
- Who is in charge of scalability and can they walk us through your architecture?
- Who understands your data the most? What kind of data do you have?
Long term Vision of the Company
- What is it, where are you with that vision, and who specifically is working on making this happen, and finally why is this the vision?
- What needs / capabilities do we each need to accelerate the business together?
- How do we expand into the market together?
- What will be the drivers of growth for our market?
- Can you provide an overview of the financial plan?
- What are the main revenue and cost drivers?
- What are the main risks to your models?
- What are margins?
- Can you provide an overview of KPIs?
- Can you quantify the revenue impact of any new initiatives?
- How do you think your metrics compare to your competition?
- What are the key components of G&A?
- What are the key assets that make up D&A?
- Can you break out the components of COS?
- Can you break out Salaries by function (COR, R&D, S&M, G&A)?
Market Risks & Future
- What are potential ideas for partnerships in the near, mid and long term?
- How does a shift of X affect your business?
- What are some potential synergies that could be realized in the next month to test out working together?