Enhancing Operational Due Diligence in M&A
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While financial, technical, and cultural due diligence are common in M&A transactions, operational due diligence is often underemphasized. How can we strengthen operational due diligence to better understand the real-world differences in daily processes, workflows, and systems especially when differences may appear minor but have major integration implications?
This is a good question. From my experience, operational due diligence largely depends on upper management and their vision for the prospective deal.
One thing that I used in my experience is to embed integration leads early into the due diligence phase. E.g. focused site visits, side-by-side process mapping, and frontline interviews can reveal workflow gaps that look small on paper but cause major integration issues later.
I think to strengthen operational due diligence, companies should engage front-line managers through interviews, shadowing, and workflow observations to uncover subtle but critical differences in processes and systems. These minor gaps—often invisible in high-level documentation—can cause major integration issues. Using scenario-based assessments and process simulations can further expose hidden risks and help prioritize key areas for alignment.
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