“Due Diligence”

Undertaking “Due Diligence” – the process of icarrying out an investigation to a business or indeed a person prior to signing any contract. I wasn’t involved in many of these during my working career, just a couple. It’s a process for instance used by a Company looking to acquire another Business, and they need to ensure they are actually getting “what it says on the tin”. So in this new modern and wonderful world of labelling, where we have to ensure that the label clearly states what the product is made up of, thereby limiting the chances of somebody have an “allergic reaction” to the contents – there shouldn’t really be any surprise should there?

It has become common practice in many industries to “outsource” elements of their businesses. The industry I was employed in for many years outsourced their IT department many, many years ago. Every five years or so the retendering process would commence, and the successful bidder would go through a “due diligence” process, just to make sure we hadn’t told any “porkies” during the whole tendering process. At the end of it all the staff involved ended up with a “different label at the top of the tin”, but the contents remained the same.

But does “due diligence” really work?

Well, in as much it would certainly ensure that everything financially was in order, and that you are able to confirm the fixed assets actually exist, then yes it probably does work.

But what about the other assets, for instance staff? Well, if you think you are taking on some four hundred directly employed staff and a number of contractors then again- yes. However, when you consider that many Companies love the concept of repeating the slogan “our staff are our biggest asset” – I have never heard of an occasion when somebody considering buying another Company has walked amongst the “unloved” asking the question –“what is it really like working for this mob?” In fact it’s often the case that the workforce doesn’t know anything about a potential “take over” until it’s actually happened.

The reality is of course in any acquisition you aren’t going to know what it’s really like until you have made the purchase and taken the lid off the tin. And when you do so and everything inside looks healthy and be cautious – because when you stick your spoon in and start uncovering bits of the contents it may not be as you hoped or imagined.

On the other hand if you are just one of the mere morsels stuck in that tin you might just be waiting for somebody to buy you, and when the lid comes off you can through yourself towards fresh air with new hope and shout “free at last”.