does anybody have experience performing pre close due diligence themselves?

December 11, 2018

by a searcher from Columbia University in 225 S Canal St, Chicago, IL 60606, USA

assuming a searcher has the knowledge, skills, and tools necessary to perform all phases of the acquisition lifecycle; would s/he still be encouraged to hire a transaction advisory team? if so, what's a typical target spend for an SF transaction - let's say expressed as a percentage of price? thanks in advance.

22 Likes

17 Replies

236 Views

Replies

Reply by a searcher
from Harvard University in 1970 Walton Dr, Burlington, WA 98233, USA

I hired functional area consultants to cover for my domain knowledge deficiencies, but only once I'd chased the diligence items down myself and had an idea what the key risks were. I ended up hiring an accounting firm (agreed upon procedures to verify working capital and earnings) a law firm (to asses outstanding legal risks) an HR consultant (to validate the 90 day transition plan from an employee perspective) and a corporate risk consultant. I limited the scope of work and hired local talent (ie best I could find in the rural valley) to keep costs down. All in advisory fees were under $50k. In hindsight would have added a lean manufacturing consultant as well.

Reply by a searcher
from University of Worcester in United Kingdom

Hey Ryo, I've done large chunks of preliminary DD and latter post close with the help of my partners and board advisors at the time. It's definitely important to have expert advise to ensure that you don't miss anything, but I also believe it's important for you as the acquirer to know what the DD process is like and analyse P&Ls, balance sheets and assets. Also especially when you start out, doing some of the grunt work keeps costs down before you are fully committed to a deal. Once you're sure, then you can bring in the experts. Hope this helps!

+15 more replies.

Join the discussion