There is a reason why most of the studies peg the failure rates of M&As in the range of 50-85% i.e. due diligence or lack thereof. Due Diligence as a process often becomes a mere formality once a target is decided. Due diligence as a process becomes confined to verifying data with a predetermined outcome. Strategic due diligence can be a powerful tool that can save millions by questioning the existence of the mystical synergies, exploring the nature of the deal and its overall effect on the portfolio. Effective Due Diligence requires an unbiased approach and a fine combing through the deal keeping a cold calculative mindset which often is lost in the hoopla around the deal.
Right questions to ask
If any of the following question’s answer is 'No', the company should simply walk away from the deal, with no regrets.