- Evaluating the acquisition's strategic rationale and synergies,
- analyzing the target's competitive position and market,
- identifying critical capabilities and personnel,
- addressing cultural integration,
- validating assumptions, and
- ensuring deal structure and price are justified
The typical steps in strategic buyer due diligence might include:
- Evaluate the goals and strategic rationale for the acquisition. Understand how the target company aligns with the buyer's overall strategic objectives and where the potential synergies lie;
- Analyze the target company's competitive position and market dynamics. Assess the target's competitive strengths, weaknesses, and market attractiveness;
- Identify critical capabilities, key personnel, assets, and resources that are essential to maintain after the deal;
- Address any cultural and organizational integration challenges;
- Validate the assumptions behind expected operational synergies. Closely examine the buyer's plans to capture cost savings, revenue enhancements, and other synergies;
- Assess potential customer, supplier and competitor responses to the acquisition. Understand how the deal may impact the target's market position and competitiveness;
- Ensure the deal structure and purchase price are justified by the strategic value. Use the insights from the due diligence process to inform the valuation and deal terms.