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Part I: M&A due diligence for CFOs


Part I – Buyer: Guidance for small- and mid-sized organisations
 
The process of due diligence typically involves a thorough investigation of the business from many different vantage points. The understanding of due diligence is best summarised by Black’s Law Dictionary as “the diligence reasonably expected from, and ordinarily exercised by, a person who seeks to satisfy a legal requirement or discharge an obligation.”
 
Due diligence usually is thought of as the long list of items the buyer must consider and verify before purchasing a business. It is often impossible to verify every detail regarding the target company, but using a team approach with knowledgeable professionals greatly minimises the risk of missing a significant factor. Because it is likely that a few items of risk will miss detection by even the most accomplished buy-side teams, the buyer affords additional protections by carefully crafting the terms of the proposed transaction with items that provide additional security to the buyer.
 
The checklist in this tool is intended to be both a learning and an educational tool and not a legal document. The purpose of this checklist is to illustrate a sample document with the more common issues related to the due diligence process that a buyer of a company should consider.

 

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