Strategic Due Diligence: The Foundation for Deal Success

Strategic due diligence is a critical component of deal analysis which investigates the commercial attractiveness of a deal and its likelihood of achieving success. Different from financial and legal due diligence, which center on determining a deal’s correct price and structure, strategic due diligence centers on determining whether a deal’s value is adequate, realistic, and attainable. It does so by first understanding the overarching deal thesis and objectives and then assessing the deal against those objectives. The target organization’s market and competitive landscape are then systematically analyzed to understand the size of the opportunity and how to effectively compete. Finally, the target is evaluated on its internal ability to execute necessary strategies. Consideration is given not only to overt aspects of a target’s strategy, but also to the underlying strategic drivers. Strategic due diligence also builds a strong platform from which effective integration and portfolio management strategies can be launched.