Due diligence is critical when pursuing an acquisition, and it is especially important to carefully assess the target company's management and key personnel, says Jay Greyson of Supply Chain Equity Partners in Go or No Go: The Value of Due Diligence.
This process should look at every aspect of a company, including concentration of customers, vendor relationships, IT systems and distribution center operations. However, Greyson advises, “all of that is secondary to management and key personnel.”
The existing relationships that management and key personnel have with customers may be integral to the success of the acquisition. In many cases, especially when the top customers make up the majority of the business, losing just one customer can diminish the value the buyer gets from the acquisition, Greyson warns.
If an acquisition is done right it can add significant value, but if done wrong "it can have a significant impact on your firm – your culture, financials of your business, how your customers view you, and how vendors view you," he says.
Read more about management's role in acquisition success in Go or No Go: The Value of Due Diligence.
