Due-Diligence of the target strategy

Why a task definition?

To enable digitization, we have to define tasks in the M&A process in detail. We use goals and objectives, a description of the task and data objects used by the task. In addition, we list questions used during execution of the tasks to provide more context. In addition we can have a look at the automatability of the task and the automation in practice. That will show us the automation potential we have today. More details will be published in my new book “Foundations of digitization for M&A processes: The Due Diligence Phase“.

The task has the following goal(s):

• Target strategy: analyzed

The task has the following formal objectives:

• Information asymmetry: minimized

• Quality: maximized
  
  

Automation capability

This task can be partially automated. However, there are only a few actions for which tools are available. Since strategies today are usually not managed and updated in application systems, automated analysis and evaluation is difficult.

Task description

While the market analysis and the evaluation of potential commercial synergies dominate in the current literature for strategic due diligence , the market analysis and evaluation in our approach is carried out in the GTM due diligence. Hence, a different approach for strategic due diligence is to be taken. The core of the considerations is exclusively the strategy of the target. Assumptions, strategic goals and measures are determined and analysed. The relationship between the business model and the operations model is considered. In comparison to the buyer strategy, the complementarity of the target strategy with the buyer strategy is established. Any strategic risks are identified and evaluated.

The task works with the following data objects:

Target Strategy, Strategic Goal of the Target Company, Strategic Measure of the Target Company, Assignment of Strategic Measures and Goals of the Target Company, Hierarchy of Strategic Goals of the Target Company, Strategic Risks of the Target Company, Strategic Assumptions of the Target, Buyer Strategy, Strategic Measure of the Buyer Company, Assignment of strategic measures and objectives of the buyer company, strategic risks of the buyer company, strategic assumptions of the buyer, strategic objective of the buyer company, hierarchy of strategic objectives of the buyer company, draft of the strategic integration plan, strategy, complementarity of the strategy, strategic synergy.

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

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