The last stepin the first phase is to prepare a comprehensive internal and externalcommunication plan that determines who should communicate in which manner throughoutthe due diligence and deal phase and into the integration phase.g. Formulating a communication plan: Compared to a physical data room an online data room is muchmore efficient, cheaper and safer as it is can be accessed even remotely througha secure log-in.f.
Creation of an online or physical data room for sensitiveinformation: This will enable the transfer and use of sensitive businessinformation between the proposer and target and will prohibit the parties in theagreement from disclosing any of the data/information to any other parties.e. Signing a confidentiality agreement: Theselists and requests must be customized as well as comprehensive in natureregarding the threats related to the target. These generally include mattersrelated to – Financial data, taxes, customers, sales, production, profitability,litigations, technology, intellectual property, contracts, any employee-managementissues, governmental, corporate and environmental regulations, related party transactions,property, marketing arrangements, competitors, online data room, disclosure schedule.d. Creating due diligence checklists and data requests: This allows the manager to get in touch withthe target and become acquainted with the target’s business and will alsoenable her/him to respond quickly and efficiently in case the proposal isaccepted.
c. Early involvement ofthe integration manager: The proposer must assess the in-house expertise that itpossesses and if feels the need of hiring an outside expert, it must do so. Anoutside expert maybe an accounting, law, consulting or investment banking firm,depending on what the requirement is.
It is always advisable to hire aconsultant as project manager as the diligence process has an importantcomponent of project management.b. Assessing in-house capabilities and hiring experts as andwhen required: The due diligence team must consist offinancial, legal and business professionals and with preferably mergers experience in case of M. The team should also consist of expertswith subject matter knowledge of key functions. The responsibilities of every team membermust be clearly defined, and the team should start working on creating a duediligence timeline.a. Forming and preparing the due diligence team: After theabove steps have been taken and when the proposer and target is in a majorconversation, the following steps need to be taken: · Position the resources in place that will help to carryout the due diligence process successfully.
· Put a preliminary communication channel into place withthe target.· Analyze opportunities and threats of the businessenvironment along with projected synergies that the proposer is set to benefitfrom.· Obtain primary knowledge about the working of the targeti.e., the services/products it has tooffer, sales and profit margins.
For any due diligence exercise to bearfruitful outcomes, planning and preparing beforehand is the primary step inthat direction. In the first step the proposer must start with the following:A: Planning & Preparation How does the DueDiligence process work?