[Jihad Saadeh]

I think the depth of due diligence is not determined by the size of acquisitions, but rather by the nature of the business and the acquiree. In certain industries, especially those that are heavily regulated and audited by major audit firms, the scope of due diligence may differ significantly compared to companies operating in sectors with less regulatory oversight or supervision.

[Gabriel Caser]

I’m also interested in hearing others perspectives, and I’d like to add another point for discussion: To what extent should due diligence be conducted in smaller acquisitions, particularly when the acquiring company will hold less than 50% of the target business?

[Ngan See Lai]

For small acquisitions, due diligence should focus on critical risk areas like financial records, key contracts, legal compliance, and major liabilities rather than exhaustive analysis. The depth should be proportional to the deal size and risk – typically 2-4 weeks with emphasis on deal-breakers rather than comprehensive operational review.

[Setho Mokobi]

The extent should be influenced predominantly by the risk grading. Not necessarily the size of the acquisition. The risk grading itself should be methodic. Some small acquisitions can lead to considerable exposure.

[John Sitler]

Ultimately, a DD is done to validate the integration thesis and the key value levers. There is no one size fits all. If the thesis is that you need to roll up 20 small acquisitions in a fragmented industry within a short time frame, you may be more valuation / speed focused, leading to a leaner bare bones approach (e.g., QOE, tax, good standing, major contracts / customers). However, if your integration thesis is looking at say talent or IP acquisition, would then opt for more detailed DDs into those specific aspects (e.g., HR DD or IP/product testing DD).

[Jerry Pomije]

We start our process with a comprehensive due diligence list. On smaller deals, the list can pare itself down quickly with some items that don’t apply and the fact that there is simply less complexity and information to review.

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