Strategic Due Diligence:
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Strategic Due Diligence
Determine the soundness of the target investment
Strategic due diligence is a rigorous analysis that evaluates the strategic rationale driving the deal. It is a forward-looking examination of the drivers of earnings and cash flow to determine if the target is a sound investment. It answers important questions, including the following:
- What are the future profit streams? Are they at risk?
- What are the strategic issues ahead?
- What is the value of the target company?
- What is the value of operational improvements?
- What are the synergies between the target and the buyer?
- When will the synergies impact cash flows?
- What should be the price of the acquisition?
What You Will Learn
The four steps of comprehensive strategic due diligence:
- Strategic due diligence of the stand-alone target
- Valuation of the stand-alone business
- Valuation of synergies
- Estimation of the final price of the deal