The four hour guide to M&A:
Hacking due diligence
This is an excerpt from the new book.
Inspired by Tim Ferriss, this page gives you the hacking due diligence rules to survive without damages in merger due diligence of technology companies.
The software industry is all about M&A. M&A is everywhere.
Working in a software company? Watch your back. You might be acquired right now. No problem. Embrace it. Use the rules below.
Not being acquired? Then maybe you should acquire to realize sustainable growth and lock out competitors.
Whatever your situation is, merger due diligence is a key activity in merger and acquisition processes. The following due diligence rules will help.
Merger Due Diligence rules
Due Diligence Rule 1: Everybody lies.
No kidding, enough tell tales in this world. Getting as much hard facts as possible, is the most important rule. If somebody tells you to cross the road with closed eyes, fine. You better check the facts.
This rule courtesy of Dr. Gregory House. This time, watching TV made a lot of sense for merger due diligence.
Due diligence Rule 2: break them before they break you
Set M&A deal breakers to sleep. identify from catalog of 50 deal breakers during merger due diligence: attack, put to sleep, done.
Due Diligence Rule 3: maximize the likelihood of success.
recall statistics? you don´t know the distribution, so 50 percent chance of success is the maximum likelihood best guess. work your way up! get the key success factors during due diligence and monitor them frequently.
Due Diligence Rule 4: minimize deal risk and find sleep
from a catalog of 200 risks during due diligence. identify, mitigate,
monitor, done. for some risk: sell them to insurance companies and have
somebody else loose their sleep.
Due diligence rule 5: Make your day. Blueprint.
What will life be like on day one? What are the steps/changes/challenges in the first 100 days? What are the goals 12/18/24 months from now? when will integration be done? You better know it. Blueprint it at the end of due diligence!
Due diligence rule 6: Look in the mirror (not the rear view mirror, stupid!)
at yourself (the acquiring company) in due diligence. What happens to
the acquiring company due to the impact of the acquired company? Will
the workload of the post merger integration hit too hard? what will the
efforts be? You better use the results of due diligence to determine the
impact and plan additional resources.
Due diligence rule 7: Safeguard your property
So you are acquiring intellectual property. great. But do you really own it? Can you really monetize it later? Run IP Due diligence to check all intellectual property of the target. If needed, establish additional IP rights. Then start monetizing post close.
Due diligence rule 8: You have all the facts. NOT.
The facts are transported. Somebody tells you facts, but forgot something. You hear the facts, but you are not sure you understood. guess what is left from the original facts. NOTHING.
stay tuned for more simple due diligence rules.....
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(C) Dr. Karl Popp 2014