A due diligence process isn’t easy to navigate. Due diligence involves a lot of work that requires careful analysis and a lot of questions. It’s also long and difficult to integrate into an M&A pipeline. One strategic acquirer that we have spoken to organized their due diligence line by breaking it into several phases. This helped reduce the stress and paralysis which can occur when the entire due diligence checklist is presented at one time.

Financial due diligence is the method of assessing the accuracy integrity, sustainability, and reliability of financial data in order to determine opportunities and risks to financials. This includes analyzing historical income statements, balance sheets and cash flow statements to learn the background of a company’s earnings. It is important to examine the past performance of a business and projected future earnings to evaluate the potential of an investment that makes sense.

Operational due-diligence reviews the company’s internal processes and systems, including the technology infrastructure as well as supply chain human resources, supply chain and more. It’s important to determine whether an acquisition is able to complement existing operational systems or if significant improvements will be required.

Review pricing strategies, sales contracts, as well as breakdowns of expenses to determine the company’s revenue, costs and profit. Seek out patterns and trends in the buying behavior of customers to find growth opportunities.

Understanding the political, economic and business conditions of a nation is important to determine if it is suitable for export. This part of the due diligence process is typically handled by a consultant who is experienced in due diligence significato exporting to specific country or region.