The menu of third party due diligence workstreams for M&A deals today has grown significantly over the past 10 years.
Back in the day, it was common only to see financial, tax and legal DD being outsourced to advisors, sometimes supplemented by commercial and technical.
Nowadays, the menu is sometimes 3-4x that length.
It is common for some of the bigger / more sophisticated investors to have a starting list of over 10 concurrent external DD workstreams, including the following (in no particular order):
- finance
- tax
- legal (including antitrust and regulatory)
- commercial
- technical
- insurance
- ESG
- cyber
- political risk
- reputational / integrity
- HR
- IP
- IT
- real estate.
Naturally, the breadth / scope not only helps deliver greater familiarity with the asset for the purposes of executing the transaction, but it helps smooth post-merger / portfolio management process.
It also has a direct impact on the availability of, and access to, insurance solutions, which can help with both risk transfer and unlocking value from balance sheets.
The emergence of specialized advisors within the M&A landscape reflects a growing recognition of the complexities involved in due diligence. As the industry evolves, we can expect to see even more specialization in areas that require deep industry knowledge.
We invite you to share your thoughts! What specialized due diligence niches do you see emerging in the future? Let us know in the comments below.
