What is the size of acquisition to outsource DD to a third party?
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Is it determined by the size of target or acquiring companies?
The decision to outsource due diligence (DD) to a third party often depends on the complexity and size of the acquisition rather than a specific dollar amount. However, for acquisitions typically valued above $50 million to $100 million, organizations often consider outsourcing DD to specialized firms. This ensures thoroughness and expertise, mitigating risks and ensuring a comprehensive assessment. Smaller deals might also benefit from third-party DD if they involve significant complexities or unfamiliar markets.
I think dd should always be outsourced to third parties unless we are talking of a really small deal.
The decision to outsource due diligence to a third party isn’t solely determined by the acquisition size. Instead, it hinges on the internal capabilities of the acquiring company. Key factors to consider include:
1) Available resources: Do you have sufficient personnel dedicated to due diligence?
2) Skillset and experience: Does your team possess the necessary expertise for the specific acquisition?
By evaluating these aspects, you can determine whether outsourcing is the most efficient and effective approach.
It depends on your company.
If you handle only a few deals a year, sure, most of it should be handled to a 3rd party if not all.
However, my recommendation on the matter is either you have M&A and PMI specialists in house dedicated to this -> then in house because you will have the resources to do it but if you don’t have the former but you are in a company doing several deals, then have one with PwC for example, to have an M&A expert but using your internal resources. If is the latter, same thing.
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