Brattle Principal Adoria Lim recently authored an article published in the June 2016 issue of Financier Worldwide discussing the importance of financial due diligence in mergers & acquisitions (M&A) transactions.
In the article, “Due Diligence is the Mother of Good Luck,” Ms. Lim explains how financial due diligence can help both the acquirers and sellers. For acquirers, a diligence firm can provide critical assistance in understanding the target’s quality of earnings, including the identification of non-recurring items and an analysis of how the target’s accounting policies affect the recognition of revenues and income. Additionally, a diligence firm could help an acquirer consider the financial impact of changes in market or industry conditions.
For sellers, a diligence firm can help the seller prepare the financial documents usually requested by potential acquirers’ diligence firms, which helps potential acquirers’ diligence processes run smoothly without delays. Furthermore, it can help the seller understand what potential acquirers’ diligence firms are likely to find and anticipate their concerns.
Ms. Lim concludes that thorough financial due diligence can help put both the acquirer and seller of a target company on the same page and make the sales process more transparent, smoother and less prone to delays or unpleasant surprises.
The article is available for download below.