What are the best strategies for conducting due diligence quickly? (2024)

FAQs

How can I make due diligence faster? ›

Use Templates. One way to speed up diligence is to use templates. Avoid starting from scratch for each acquisition, especially if the M&A strategy involves acquiring similar companies. Document each process and use the documentation as a guide for future diligence.

Strategic due diligence considers not only the current competitive environment, but also the anticipated changes that may follow deal completion. Strategic actions of competitors in response to the deal are anticipated and incorporated into the analysis.

Below, we take a closer look at the three elements that comprise human rights due diligence – identify and assess, prevent and mitigate and account –, quoting from the Guiding Principles.

A few tangible principles can help guide the way, including people, performance, philosophy, and process. Four less tangible principles can also play a role in manager selection: passion, perspective, purpose, and progress.

Consider key factors like the political and economic environment, legal compliance, market analysis, operational assessment, financial analysis, cultural differences, human resources, intellectual property rights, environmental impact, and risk assessment.

This is a non-exhaustive list of information and documentation that will be needed in the due diligence process. As each investigation will differ in terms of needed materials, the below can serve as a preparatory guide.

1.Standard due diligence

Applied to determine and verify a new customer's identity and gain initial insight into its risk profile. It aims to ensure that at least essential checks are performed before a customer onboarding process.

This will include finances, sales figures, customer data, ownership of assets, personnel records, and customer data.

Simplified due diligence is the lowest level of due diligence that can be completed on a customer. This is considered appropriate where there is little opportunity or risk of your services or customer becoming involved in money laundering or terrorist financing.

How to do a due diligence checklist? ›

A risk-based approach is used to determine the scope of due diligence conducted. Generally, we need to focus on new partners or where the risk of using an existing partner has significantly changed.

There are quantitative and qualitative aspects to diligence, and it can take anywhere from 6-12 weeks depending on the size and complexity of the business.

The duration of due diligence varies depending on the complexity of the deal, it typically takes several weeks to a few months to complete. There are various types of due diligence, including financial, legal, commercial, operational, environmental, human resources, intellectual property, tax, and IT due diligence.

Big Surprises in Due Diligence: During due diligence, the buyer may discover that the target company is not what they expected. This could be due to operational issues, poor recordkeeping, inadequate systems, or other concerns. If the buyer believes that these problems make the investment too risky, they may walk away.

“Due diligence for a business acquisition can range from six to 12 weeks or longer, depending on the complexity of the company and transaction.”