The M&A due diligence process is where most of the elapsed time in a transaction disappears, and very little of it is analysis. The list goes out, a third of it comes back slowly, and somebody junior spends six weeks chasing the remainder while the deal risk quietly accumulates. This page sets out the phases, puts a number on the chasing, and covers the two things that genuinely compress it.
The list, and why its size is not the problem
A few hundred requests across financial, legal, commercial, operational, technology and human resources. The count looks alarming and is mostly routine: the seller has the documents. What matters is who on the seller's side owns answering, because a list assigned to nobody is answered at the speed of whoever happens to have time.
What the chasing costs, measured
On this site's worked example, 180 requests at 62% answered leaves 68.4 open. Chasing each at 0.4 hours a week for six weeks is 164.16 hours and $15,595.20 of analyst time at $95, which is $228 for every request that stays open. None of that appears in any fee model and all of it is real.
Compression one: start before the LOI is signed
A seller who assembled the obvious material during the exclusivity negotiation closes weeks faster than one who starts on receipt of the list. The adviser is the only party who can insist on that, and it is worth more than any process improvement inside diligence itself.
Compression two: one owner per category on each side
Financial, legal, commercial and technology each need a name on both sides. The alternative is a list where every unanswered item is somebody's second priority, which is how a six-week phase becomes eleven weeks without anybody making a decision.
Questions people ask about m&a due diligence process
How long does diligence take?
Longer than planned, and mostly waiting rather than working. The open items, not the total, decide the elapsed time.
What does chasing cost?
On the worked example, $228 per request left open for six weeks, and $15,595.20 across a list of 180 that is 62% answered.
What compresses it most?
Starting before the LOI is signed, and a named owner per category on both sides.