M&A Due Diligence Process Explained: A Comprehensive Step-by-Step Guide for Buyers
Master the M&A due diligence process with our in-depth, buyer-focused guide. Discover the essential stages of due diligence, from initial planning to final report preparation. Learn how to effectively coordinate with legal advisors, manage document reviews, and navigate complex information requests. Our expert insights cover key areas such as financial analysis, legal compliance, operational assessment, and risk identification. Ideal for corporate development teams, C-suite executives, and first-time acquirers looking to optimize their M&A strategy. Streamline your due diligence workflow, avoid common pitfalls, and make informed decisions with our systematic approach to this critical phase of mergers and acquisitions.
Seller sets up VDR
Select Virtual Data Room (or VDR): The Seller sets up a secure virtual data room to share documents with the Buyer.
Initial Request List (or IRL): The Buyer prepares an IRL of documents and information required from the Seller.
Upload documents to VDR: The Seller uploads the requested documents to the VDR.
Invite Buyer to VDR: The Seller invites the Buyer to the VDR so they can access the documents.
Agree on scope of Buyer's review
Duplicate Seller's VDR: The Buyer reviews documents within the VDR or downloads the documents and stores them in their own software (if they have permission to do so).
Agree on scope of work: The Buyer and its legal advisor will agree what documents need to be reviewed and the nature of their review (e.g. ‘red flags’ only or a more detailed review).
Customize templates
Customize templates: The Buyer’s legal advisor customizes document review templates based on the scope of work.
Assemble review team
Assemble document reviewers: The Buyer’s legal advisor assembles a team of reviewers, normally consisting of subject matter experts.
Classify documents and assign documents to reviewers: The legal advisor classifies the documents in the VDR based on document type and assigns them to the reviewers.
Review documents
Document review: The Buyer's legal advisor reviews the assigned documents, identifying any red flags and preparing document summaries of key terms.
Compile Individual Document Reviews: The Buyer compiles the individual document reviews, comments, and findings from the review teams.
Prepare report
Draft Report: The Buyer’s legal advisor prepares a draft report summarizing the findings, risks, and recommendations from the due diligence process.
Generate Final Report and Implement Recommendations: The Buyer’s legal advisor finalizes the due diligence report, incorporating the client’s feedback and outstanding requests for information asked of the Seller.
