- November 1, 2021 at 6:06 pm #639686Noah098Member
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ma’am I found these 2 points in in purpose of due diligence, but I don’t understand what differentiates them…
As well as the risk associated with the valuation of a business, the acquirer must also consider operational implications which could jeopardise a proposed acquisition, such as high staff turnover, the need to renegotiate supplier or customer contracts or contracts with lenders, and future changes in the product mix of the target company. Any of these could lead to operational problems in the future and could be considered potential ‘deal breakers’ or, at the very least, be used to negotiate the acquisition price.
Due diligence will also assess the potential commercial benefits and drawbacks of the acquisition. For example, it could be used to calculate the potential economies of scale from aligning the supply chains of the buyer and the target company. On the other hand, there are post?acquisition costs to consider, such as the costs of reorganisation and the potential staff turnover which may be experienced.November 2, 2021 at 7:28 am #639736Kim SmithKeymaster
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The first para is focusing on the operational issues of the target – the second is more focused on matters of integration.
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