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See the wood

Due Diligence is an involving task, where the old idiom ‘…can’t see the wood for the trees’ is true.

It is very easy to get immersed in the detail of a transaction – checking that balance sheets balance, existence of assets, invoices are not shredded etc etc. However most value from the DD process is derived from standing back and pondering – is my client getting a good deal?

Before you embark on detailed financial due diligence, I wholeheartedly recommend you spend half a day with your accountant and your offer letter (or heads of agreement). Not only will your accountant be able to independently appraise the all important headline figures associated with the transaction, but this will also allow you to identify risk areas together – ensuring a more focused DD process.

Oh and by the way, it is useful to review the ‘wood’ element before a not insignificant fee has been agreed with your accountants and lawyers.

 

 

Date: 22nd August, 2007
Author: Gary Farnes

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