It is our observation that financial buyers have definite advantages over corporate buyers in the area of strategic due diligence. With input from the pros, we have developed an approach based on four principles:
- Ask the big questions to confirm your clear investment thesis
- Determine the target's standalone value based on a rigorous understanding of cash flows
- Ensure synergies work for you, not against you
- Chart a course early to unlock integration value quickly
If strategic due diligence feels like a retrospective bean-counting exercise, you're doing it wrong. The science of book due diligence is vital. But it is a meaningless exercise without the art of strategic due diligence, a forward-looking process that helps you understand how you can create value through an acquisition. The best acquirers investigate targets with a nose for what's really important, identifying the key sources of ongoing value and sniffing out any "perfumed pigs," buffed up for sale.