Beyond the Number Crunching

Abstract

Thanks to an oversupply of capital, and to the increasing presence of both traditional and non-traditional M&A players, we are in the midst of a hyperactive deal environment, in which the supply of qualified deals can't meet the demand. Companies, private equity firms and even hedge funds intuitively know that some transactions don't make good business sense. But in their rush to move forward, they often forget about due diligence. That oversight can lead to financial disaster. Due diligence, when done right, can differentiate those companies for which an infusion of capital makes sense, from companies where more capital will simply paper over fundamental deficiencies. Though financial due diligence is critical, the process is still incomplete if one also doesn't perform operational and strategic due diligence.