BBC Business Headlines

House of Fraser revival 'challenging'
Sports Direct boss Mike Ashley sees "significant challenges" in turning around the department store chain.


Pound sheds some earlier gains as May wins confidence vote
Sterling sheds some of its earlier gains after leadership confidence vote result is revealed.


Twitter's Jack Dorsey answers critics of Myanmar meditation retreat
Twitter's chief executive says he needs to learn more about the plight of the Rohingya in Myanmar.


Canadian Michael Spavor missing in China
Michael Spavor is believed to have been detained on suspicion of harming China's national security.


China's Tencent Music jumps on US launch
Tencent Music Entertainment Group raises $1.1bn as it lists on the New York Stock Exchange.



Search Books:

Join our mailing list:


Business Blogs

Paul Krugman

The G.O.P. Goes Full Authoritarian
Only Trump’s flamboyant awfulness stands in the way of his party’s power grab. read more...




Online Marketing for Busy Authors
Now available!


The AMA Handbook of Due Diligence Excerpt from The AMA Handbook of Due Diligence

by William M. Crilly and Andrew J. Sherman



Common Mistakes Made by Buyers During Due Diligence

1. Mismatch between the documents provided by the seller and the skills of the buyer's review team. It may be the case that the seller has particularly complex financial statements or highly technical reports which must be truly understood by the buyer's due diligence team. Make sure there is a capability fit.

2. Poor communication and misunderstandings. The communications should be open and clear between the teams of the buyer and the seller. The process must be well orchestrated.

3. Lack of planning and focus in the preparation of the due diligence questionnaires and in the interviews with the seller's team. The focus must be on asking the right questions, not just a lot of questions. Seller's will resent wasteful "fishing expeditions" when the buyer's team is unfocused.

4. Inadequate time devoted to tax and financial matters. The buyer's (and seller's) CFO and CPA must play an integral part in the due diligence process in order to gather data on past financial performance and tax reporting, unusual financial events or disturbing trends or inefficiencies.

5. Lack of reasonable accommodations and support for the buyer's due diligence team. The buyer must insist that its team will be treated like welcome guests, not enemies from the IRS! Many times buyer's counsel is sent to a dark room in the corner of the building to inspect documents without coffee, windows or phones. It will enhance and expedite the transaction if the seller provides reasonable accommodations and support for the buyer's due diligence team.

6. Ignoring the real story behind the numbers. The buyer and its team must dig deep into the financial data and test (and retest) the value proposition as to whether the deal truly makes sense. They must ask themselves, "Does the real value truly justify the price?" The economics of the deal may not hold water once a realistic look at cost allocation, inventory turnover, and capacity utilization is taken into account.

Excerpted from The AMA Handbook of Due Diligence by William M. Crilly and Andrew J. Sherman. Copyright © 2010 William M. Crilly and Andrew J. Sherman. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission. All rights reserved. http://www.amacombooks.org.