Governance, Management and Cultural due diligence
What is it that your commercial due diligence reports almost certainly will not tell you about the deal you hope to complete?
As an investor, you will be attracted to the prospects of the good deal available to you because it makes compelling commercial sense. You can see the promise of untapped value on the evidence of past performance and the projections for the future.
During the process of evaluating your investment, you will be offered commercial due diligence reports which will often draw your attention to the legal and technical problems with the deal. However, the reports can often fail to develop the story behind the problems. A clear example of what might be overlooked is an assessment of the capability of the management to carry forward the vision that makes the most sense to you as an investor. Without this, it may be difficult to capitalise on the underlying value.
A high proportion of deals fail to deliver their projected returns for various reasons, both strategic and operational. One of the most quoted operational reasons is the failure to identify and manage the problems of integration. Without this level of control, the strategy for the new business is put at risk. The research evidence points to the frequency of failures to deliver against measureable expectations at somewhere between 40% and 70%.
We are able to help at the point of a new acquisition or when you are reviewing your existing investment. Because of our extensive experience of working with management teams, we know what a cohesive and effective group of executives look like and we are quick to spot dysfunctional behaviour and the signs of chronic underperformance.
The process of unlocking the underlying value may be difficult and challenging, but the route to this is rarely exclusive financial re-engineering. It lies with the skills, experience, knowledge and disposition of the newly formed management. They are either equipped to find a way to lead and manage the business in an effective way or they do not.
Working with us will give you additional insights into the leadership and management culture which gives you a deeper understanding of the issues which may or may not have been highlighted through the risk assessment and the governance audit.