The due diligence process in mergers and acquisitions is six workstreams running in parallel against one request list, and almost everything that goes wrong goes wrong at the joins between them rather than inside any one. This page sets out the six, where the coordination fails, and what the coordination costs in hours that never appear in an adviser's quote.
The six workstreams
Financial, legal, commercial, technology, tax and management. Each has its own provider, its own timetable and its own report, and each produces findings that change somebody else's work. The buyer coordinates, and coordination is a real job rather than an administrative one.
Where it fails: the joins
The classic failure is legal finding a change-of-control clause three weeks after the commercial team modelled that contract as recurring revenue, one week before committee. Nobody owns the join, so the finding reaches the model late and the price walk that follows looks arbitrary to the seller.
What the chasing costs
On this site's worked example, 180 requests at 62% answered leaves 68.4 open; chasing each at 0.4 hours a week over six weeks is 164.16 hours and $15,595.20 at $95 an hour, which is $228 per request left open. It is the buyer's own time and it is in nobody's fee quote.
What compresses it
One named owner per workstream on both sides, and a seller who assembled the obvious material during exclusivity rather than on receipt of the list. Both are free and both are worth more than any process improvement inside a single workstream.
Questions people ask about due diligence process in mergers and acquisitions
How many workstreams run in parallel?
Six: financial, legal, commercial, technology, tax and management, each with its own provider and its own report.
Where does the process fail?
At the joins, where one workstream's finding invalidates another's work and nobody owns the connection between them.
What does the chasing cost?
$228 per request left open six weeks, and $15,595.20 across a list of 180 that is 62% answered.