Mergers and acquisitions are an increasingly prominent feature of the corporate landscape, ranging from asset purchase, to acquisition, to merger of equals. Problematic transactions that capture press/shareholder attention frequently share a common condition – the failure by the purchaser to detect some problem adversely affecting deal viability before closing. The foundation of Shared Assessments is to help outsourcers assess the risk hygiene of potential third parties by applying sound due diligence practices throughout the lifecycle: from vendor selection through termination. And, because a merger/acquisition target becomes, in fact, a third party to the buyer, we are convinced that the due diligence practices we’ve developed and refined over the last 14 years are applicable to the M&A setting.
Our briefing paper, Using TPRM Best Practices to Improve M&A Outcomes, describes how applying TPRM tools and techniques to the M&A discovery processes can help to identify risks that might be otherwise be overlooked, thus helping acquirers avoid the financial and reputational losses that can result from inadequate and unfocused due diligence. And, in enterprises of any size, the staff of professionals with the requisite skills and experience already exists.
We detail how due diligence should be applied in each of the five stages of the M&A lifecycle:
- Pre-selection
- Selection
- Pre-Signing
- Acquisition (Post-Signing/Pre-Closing)
- Post-Closing
We acknowledge that sound TPRM practices aren’t a panacea. M&A transactions are extremely complex, and cultural incompatibility can unravel the most carefully planned deal. But when applied to the process, they won’t hurt.
