Due Diligence during Company Mergers & Acquisitions (PDF)

Seminar paper from the year 2006 in the subject Business economics - Business Management, Corporate Governance, grade: 1,0, BVL Campus gGmbH, language: English, abstract: This term paper focuses on the idea and structure of the due diligence process and its applicability during company merger & acquisition (M&A) activities. Unfortunately 40% - 85% of company M&A still do not live up to the acquirers' expectations or even fail completely due to information asymmetries. The analytical approach of the due diligence process represents a way to overcome gaps in company analysis and evaluations.
Initial point of this paper is a description of the basics in the process of company M&A and the main reasons for their failure. The due diligence is an approach to apply best practices out of the financial market routine in order to overcome these critical problems. In this light the different operational steps of the due diligence process as well as its most commonly functional applications and their specific attributes are examined.
It is shown that information is the paramount groundwork for a representative company assessment. Due to reoccurring analysis failures during contemporary M&A activities the due diligence concept is a useful approach to avoid imprecise handling of information.