January 19, 2020

The prepare a comprehensive internal and external communication plan

The last step
in the first phase is to prepare a comprehensive internal and external
communication plan that determines who should communicate in which manner throughout
the due diligence and deal phase and into the integration phase.

g.     Formulating a communication plan:

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Compared to a physical data room an online data room is much
more efficient, cheaper and safer as it is can be accessed even remotely through
a secure log-in.

f.      Creation of an online or physical data room for sensitive
information:

 

This will enable the transfer and use of sensitive business
information between the proposer and target and will prohibit the parties in the
agreement from disclosing any of the data/information to any other parties.

e.      Signing a confidentiality agreement:

 

These
lists and requests must be customized as well as comprehensive in nature
regarding the threats related to the target. These generally include matters
related to – Financial data, taxes, customers, sales, production, profitability,
litigations, technology, intellectual property, contracts, any employee-management
issues, governmental, corporate and environmental regulations, related party transactions,
property, marketing arrangements, competitors, online data room, disclosure schedule.

d.     Creating due diligence checklists and data requests:

 

This allows the manager to get in touch with
the target and become acquainted with the target’s business and will also
enable her/him to respond quickly and efficiently in case the proposal is
accepted.

c.     
Early involvement of
the integration manager:

 

The proposer must assess the in-house expertise that it
possesses and if feels the need of hiring an outside expert, it must do so. An
outside expert maybe an accounting, law, consulting or investment banking firm,
depending on what the requirement is. It is always advisable to hire a
consultant as project manager as the diligence process has an important
component of project management.

b.     Assessing in-house capabilities and hiring experts as and
when required:

 

The due diligence team must consist of
financial, legal and business professionals and with preferably mergers &
acquisitions experience in case of M. The team should also consist of experts
with subject matter knowledge of key functions. The responsibilities of every team member
must be clearly defined, and the team should start working on creating a due
diligence timeline.

a.     Forming and preparing the due diligence team:

 

After the
above steps have been taken and when the proposer and target is in a major
conversation, the following steps need to be taken:

 

 

·      
Position the resources in place that will help to carry
out the due diligence process successfully.

·      
Put a preliminary communication channel into place with
the target.

·      
Analyze opportunities and threats of the business
environment along with projected synergies that the proposer is set to benefit
from.

·      
Obtain primary knowledge about the working of the target
i.e., the services/products it has to
offer, sales and profit margins.

For any due diligence exercise to bear
fruitful outcomes, planning and preparing beforehand is the primary step in
that direction. In the first step the proposer must start with the following:

A: Planning & Preparation

 

How does the Due
Diligence process work?

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