Due Diligence Team Engagement Timeline
August 19, 2024
by a searcher from Harvard University - Harvard Business School in Washington, DC, USA
Hi all,
Looking for advice/best practices on when to engage a DD team (lawyer, CPA etc.) in a self-funded search. Before you have an LLC or anything? After you have set up your search fund but before sourcing? When you find a target?
Also, other than a good lawyer and accountant (and brokers), are there any other professionals that would be useful in the process?
Thanks!
from Bentley College in Miami, FL, USA
Before You Have an LLC or Anything:
Engaging a due diligence team this early in the process isn't usually necessary unless you’re evaluating a specific opportunity that’s progressing quickly. However, it’s wise to start building relationships with key professionals early on. Having informal discussions with potential legal and financial advisors can be beneficial, as they can provide valuable insights and help you refine your search criteria.
After Setting Up Your Search Fund:
Once your search fund is set up, you should begin to establish a more formal relationship with your key advisors. This is the time to select your core team (lawyer, CPA, etc.) who will be ready to dive in when you find a target. You may also want to consider professionals who specialize in areas like Quality of Earnings (QofE) analysis, especially if you're focusing on industries with complex financials.
When You Find a Target:
The most critical time to fully engage your due diligence team is after you’ve identified a target and have an accepted LOI. This is when your lawyer, CPA, and other advisors will perform a deep dive into the business to uncover any potential red flags and verify that the financials and operations are as represented.
Additional Professionals to Consider:
- M&A Advisors or Consultants: They can provide strategic advice, especially if you’re navigating complex transactions or need help with negotiation tactics.
- Industry Experts: Depending on the industry, it might be beneficial to engage an expert who understands the specific operational, regulatory, or market dynamics of the target business.
- Due Diligence Specialists: If the business you’re targeting has unique aspects (like intellectual property, technology, or environmental concerns), specialized due diligence providers can offer critical insights.
- IT and Cybersecurity Experts: In today’s digital landscape, assessing a target’s IT infrastructure and cybersecurity measures is crucial.
If you're looking for a curated network of vetted professionals who specialize in various aspects of due diligence, you might want to check out DueDilio. It's a marketplace where you can connect with experts tailored to your specific needs in the M&A process, from initial assessments to in-depth due diligence.
https://www.duedilio.com
Good luck with your search!
from Columbia University in New York, USA