Before getting into the due diligence process and other key components of entering a purchase agreement, the buyer will typically provide you with a term sheet or letter of intent (LOI). In this document, the buyer will express his or her interest in entering the transaction and will outline the legal and commercial terms, including the price and structure of the purchase. A term sheet or LOI can guide the purchase process by focusing negotiations on the key terms and identifying deal breakers.
Last month In MidMarket Talk, Dealmakers Planning for a Successful Integration: Performing Cultural Due Diligence (CDD) focused on providing better understanding the concept of Cultural Due Diligence (CDD). Now we can turn our attention to some of its nuts and bolts and how the process of CDD might look like as it plays out in the real world of mergers and acquisitions.
Being an M&A advisor is an experience of constant learning. No matter how long I work in this profession — and I’ve been doing it for more than 20 years — I never cease to encounter situations that present unforeseen challenges.
I recently participated in a forum with five other experienced M&A professionals in which we talked through our experiences of managing risk in the mergers and acquisitions process. By exchanging stories of deals gone wrong, we touched on some common points about the work we do.
Over the past few years, the adoption of rigorous, third-party customer due diligence has rapidly increased on the buy-side. Acquirers have come to understand that an objective validation of the strength and stability of a target’s customer relationships is essential to validate their investment hypotheses and determine the long-term growth potential of a company.
Last month In MidMarket Talk, What Dealmakers Need to Know: Cultural Due Diligence (CDD) made the case that CDD should be an integral part of making deals successful and sustainable. A quick review of the harsh reality is that most merger or acquisition deals fail. The reasons why are obvious.
At the Miami AM&AA Winter Conference, two of us presented the topic, Dealmakers: Heads in the Sand or Dealing Effectively with Culture Clash and other Human Capital Challenges. We shared some insights, experiences, and best practices on how to prevent critical deal value from being destroyed by cultural and organizational issues.
Cultural Due Diligence or CDD should be made part of every deal to help insure its long-term success. The numbers remain staggering insofar as upwards of 90% of deals fail due to cultural issues.