The crux of due diligence is the need to mitigate overall transaction risk through the identification , quantification and substantiation of value drivers or value inhibitors, and to recognize the differences, if any, between these and what was the basis of anticipated deal value at the beginning of the process.
For every transaction, one can define a transaction value matrix, which frames the key sources of value to be derived from the target either alone or as a synergy from the combined operation. The due diligence process endeavors to substantiate these value metrics and begins the planning which can increase the likelihood of realizing significant value from different parts of the deal matrix. In short, when looking at the value of the target, due diligence helps identify what actually exists.
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