From The Due Diligence Show (Episode 4), the team at Thought Source say “Do your deal homework!” – There are so many things that can be easily done before a deal is in play. The Thought Source team chat about how often a deal is in the final throws of due diligence and we ask ourselves, why didn’t the buyer know this beforehand? Whether its competitive intelligence, bake-offs, outside-in reviews, product quality and support analysis, all of these activities can be easily done using publicly available information without the hint of a deal.

Adam Jaques: Welcome back to the deal room. We are back to talk about what work can be done before a deal is actually signed. Now, this is actually really powerful because there is a lot of work that can be done in terms of technology and analysis, doing your homework. Andrew, kick us off.

Andrew Borzycki: When you start the process. It’s really important to understand why you’re actually trying to do this. Why do you want to buy something? What are your intentions after this? There’s a whole area of ways that we can actually help you with this in terms of understanding all the different companies that are out there, what they can do, and how this can help them line up with what you’re trying to achieve. And this can all be done at arm’s length. And that’s one of the benefits of actually getting somebody else to do this. It helps you actually sort out reality from the vision and what the company is telling you. We do this from the outside. We get to experience what any other customer would experience. The pre deal experience helps you understand what it is like to work with them as a company as and as a customer. If you go through the normal process of going down the M&A path, you’re going to be having high level executive contacts and you’re going to get the red carpet rolled out for you, which may not actually be the experience that everybody else gets. That’s why it’s so important to get someone else to do it.

Adam Jaques: Competitive Intel is showing who are the players in the market and what are their product strengths? We love to get hands on and as you say, outside in looking at what’s there, what could be there, and what’s working well today. It’s also called a bake off.

Luke Silcock: The bake offs are a bit of a market assessment as well as to what’s out there in terms of the different competitors, the different products that may be competing to be purchased. We find that sometimes our clients don’t actually know which company they are after at one point, but they’re looking for an assessment opinion as to how different products or technologies that are out there will potentially fit with their own offering. We’ll be seeing how the existing products integrate. It’s a very hands-on process. It’s not just, three consultants looking at a website. It’s about technologists actually trying the products out, looking at the features looking at the quality, the experience, the support mechanisms, even the way that customers are served through an organization. There are lots of things that we can do such as sentiments and other ones that you can look at from a pre deal experience.

Andrew Borzycki: The ideal preview finds out things before the diligence. If you’re in diligence, and you think we should have found this out before we signed the LOI. Well, that’s the list of stuff that you should have done up front.

Luke Silcock: This has happened to us a number of times. Where we’ve come to a point towards the end of a deal that’s going more bad than good. And we shouldn’t be finding this simple stuff at this stage. Why wasn’t an engagement done earlier on to actually look at this type of thing. Some companies want to bring that responsibility on themselves and that’s fine. But that diligence needs to be done beforehand. You should be looking at everything publicly available before you go down the path of actually acquiring company. This is vitally important. You’ve got to actually try this stuff out.

Adam Jaques: There are lot of things we can do pre deal before you go down the path of getting the lawyers involved in in contracts involved and getting all that stuff happening. You can learn a lot from what’s out there publicly. We do it quite often for our clients, and it’s really powerful.

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INTRODUCING

THE TECHNICAL DUE DILIGENCE SHOW

The Thought Source team have produced a video series covering the "behind the scenes" of performing technical due diligence for M&A projects.

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