Assessing the balance of risk and opportunity in strategic due diligence
It can be argued that strategic due diligence is ultimately about assessing risk. How likely is something to go wrong post-deal and how big an impact would it have if it did? But the same applies to opportunity. An investor mustn’t get hung up on risk without giving as much pre-deal attention to opportunity – and to the balance between the two.
Forecasting market demand in strategic due diligence
Gauging market size is all very well, but what often matters more in strategic due diligence is where the market is going – the dynamics, as opposed to the statics. Is market demand in the target’s main business segments growing, shrinking, or flat-lining? This is the big question. It’s not the only one, of course. Equally important is the nature of the competition the target faces and how well it is placed to compete. But it’s the first big ‘un.
Deriving revenue forecasts in strategic due diligence
Reviewing a management team’s revenue forecasts is a critical component of strategic due diligence.
Dos and don’ts of strategic due diligence
Strategic due diligence isn’t a pushover, but nor is it so extraordinarily complex that an intelligent manager or financier shouldn’t be able to carry it out him or herself. All you need is a good guide (such as my book) and to remember a few tips.