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  • Type: Publication series
  • Date: 7/1/2014

Why due diligence is of utmost importance in a M&A transaction 

Prior to taking over another company potential buyers should complete a thorough examination of every aspect of the target’s operations, for the long-term benefit of both parties
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In contrast to the rest of the world’s sluggish growth and uncertainty in the wake of recent economic turbulence, African economies lead the way with their forecast high rates of growth and the immense opportunities they can bring to the world. Mergers and acquisitions (M&A) activity on the continent has remained resilient and is expected to increase. In order to make a good investment decision, carrying out due diligence is critical for any potential investor.

 

KPMG’s sixth global survey on M&A revealed ‘What would you do differently?’ In each of our studies, when we ask acquiring managers what they would do differently next time, the three themes that recur are:

  • Better due diligence and planning;
  • Faster implementation/ integration; and,
  • More attention to HR and cultural matters.

 

What is a due diligence?

 

Due diligence is a thorough examination of all critical aspects of the business subject to the transaction (‘Target’), typically undertaken prior to agreeing the final value and signing of the sale and purchase agreement terms. Every aspect of the Target’s operations should be subject to due diligence – financial, commercial, operational, tax, human resource, IT, antibribery/ corruption, integrity, environmental, social, health and safety, governance, regulatory, and so on...Read more