War on Diligence

“To not prepare is the greatest of crimes; to be prepared beforehand for any contingency is the greatest of virtues,” writes Sun Tzu in the “Art of War.” The diligence review is the most time-intensive and expensive aspect of any M&A transaction. Yet, most attorneys wage war on diligence without adequate preparation, resulting in time delays, missed issues, budget overruns and an inferior bargaining position. This article focuses on select tactics that an attorney representing the buyer can use to help it win the war on diligence.

One of the most powerful weapons for a buy-side attorney is the diligence request list. The diligence request list affords the buyer an opportunity to assess its target, the seller, by exposing the seller’s weaknesses and strengths. Most buy-side attorneys, however, waste this important opportunity by using a generic diligence request list. A wise buy-side attorney will take the following steps to forge a diligence request list into the ultimate diligence weapon.