Conducting due diligence investigations in all your business dealings is widely accepted as a good company practice. Sometimes, however, these reviews don’t generate the results we’re looking for. Here are a couple of tips to help you get the kind of reviews you need out of your due diligence investigations.
1. Create your own internal due diligence review team.
It’s common practice to hire neutral third-party consultants to conduct due diligence investigations. It would be a worthy investment, however, for your company to have its own competent internal team dedicated to that task. This way, they can specifically focus on target areas you are most concerned with, and as a result, generate the answers you’re looking for.
2. Collaborate with professional consultants.
Have your internal due diligence team regularly collaborate with trusted and independent professional consultants, particularly in cases where you have a lot of uncertainties. Fill the spots on this team with legal counsels, appraisers, financial and tax experts, and other professionals that can help with the mission.
You don’t need these two groups to work together as one bigger party. What you want is for the professional consultants you hire to produce results that your own internal team can analyze. Use results from both groups to validate facts and look at certain issues from different angles.
3. Set roles and goals clearly.
Having your internal team and a group of professional consultants undertake the due diligence investigation is akin to having two heads looking at one situation. Make sure to cover buyer relevant information by setting roles and goals clearly.
For example, you can assign your internal group to focus on the target’s transactions that are relevant to the acquisition. This team can give advice on whether certain areas need more special attention and procedure to glean the information you need.
Meanwhile, your group of professional consultants can focus on giving analyses, comments, and insights based on your target’s business and financial transactions. This will allow you and your company to make informed decisions about all your business dealings with the target.
4. Carefully have a business and financial affairs reviewed.
If you didn’t get the results you need despite a “thorough” investigation, the problem might be that your teams simply did not look at the right place. Often times, the information you need about your target is found in their business and financial affairs. Have your internal team focus on the target’s business dealings, their annual reports, their reputation in the local business community, as well as related public and government records.
5. Set a price for the acquisition early on in the process.
The usual practice in the Philippines is to conduct a due diligence investigation and then perform a valuation exercise based on the results of the review. Instead of waiting for all the results, do the valuation exercise before the investigation to set the tone for the rest of the work.
Learn more about due diligence investigations in the Philippines by browsing our blog. You can also get in touch with Duran & Duran-Schulze Law at info@duranschulze.com or (+632) 478 5826.