What is the due diligence process for an M&A deal?

The due diligence process for an M&A deal typically involves questioning and confirming all key aspects of the business, especially the growth trajectory of the business and industry. PE firms will often hire 3rd parties to help out with different aspects of due diligence.

Some of the most important due diligence is done on the industry, and this can include competitor analysis, pricing analysis, volume analysis, and speaking with industry experts.

Due diligence will also be done on the company’s financials, accounting statements, EBITDA and earnings, customers, products, strategy, distribution chain, etc.

There are many other common due diligence items that are more “check-the-box” and perfunctory in nature, which are often 100% outsourced to third parties. These include: IT, lender due diligence, facility due diligence, site visit, environmental due diligence, market sizing, compensation of management, ownership, legal, tax and insurance.