Acquisitions Due Diligence Practices for Buyers

Gary D. Herwitz serves as the founder and managing partner of CoMetrics Partners, LLC, where he focuses on helping companies achieve growth and efficiency. With extensive experience in facilitating business transactions, Gary Herwitz often assists companies with merger and acquisition activities, including the due diligence process.

An important step for buyers in making an acquisition is to complete a range of due diligence processes, which ensure that the company is fully aware of what it is purchasing and the obligations associated with the purchase. During the due diligence process, buyers investigate litigation possibilities, contingent liabilities, intellectual property concerns, and other matters to mitigate risk. Buyers should thoroughly examine the target company’s financial status by analyzing financial statements and other documents to develop a stronger understanding of issues such as profit margins and working capital.

Along with investigating the target company’s financial performance and intellectual property, buyers can use the due diligence process to determine if the acquisition offers a strategic match for both the buyer and the target company. The buyer’s strategic analysis often includes a study of how the acquisition will generate cost savings, create marginal costs, and yield revenue enhancements.