Page 31 - MAC4861_2 Finance class slides part 2 - 4. Mergers & Acquisitions (UNISA)

MERGERS & ACQUISITIONS

Due diligence investigations

• A due diligence investigation refers to a detailed

examination of the target company prior to the merger

or acquisition. The aim of such investigations is to
verify/audit, amongst others, the financial, legal and

operational information of the target company so as to

ensure that the acquiring company makes an informed
decision.

• These procedures are usually carried out by a special

team who have experience in this field and consist of

employees of the acquiring company and some experts

if necessary. The results of such procedures could lead
to a change in the terms of the proposed merger or

acquisition or even a cancellation of the transaction

(Correia, Flynn, Uliana & Wormald 2011).

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