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How To Organize Teamwork During M&A Due Diligence

Kison Patel

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

CEO and Founder of DealRoom

The best due diligence is usually the result of quality collaboration between members of the due diligence team.

But as these teams tend to be a diverse mix of professionals, the resulting dynamics can be difficult to predict.

The quality and quantity of your due diligence team will determine how long the process will take. You should be careful and take your time in this process since rushing may result in losses that could have been avoided.

You need to get a competent team—and don't be surprised if the process takes longer than initially expected. To have a team that functions seamlessly, the following is how you can organize your teamwork during an M&A due diligence.

As a leader in the organizing diligence process, in this article, DealRoom looks at the role of the team in M&A due diligence, and here are our insights.

1. Know the Limits

All parties must agree on the confidentiality of the information collected in this process.

A commonly used contract is the non-disclosure agreement which helps you set the rules on the disclosure and use of the information, the review scope and limitation, and the extent of freedom your team can go in exchanging sensitive data and matters related to the M&A.

You must also set a boundary for communication.

A communication plan details internal and external communication. It shows your team what is to be said and who should say it to ensure there is a clear definition of the accountability of everyone involved.

During your due diligence process, your team will have access to confidential data. There needs to be a secure place to keep these documents.

The best choice here is an online data room with project management capabilities like DealRoom. This helps to create a boundary where only authorized persons can access the data and communicate on it.

M&A project management

2. Build the Team

Core Principles

When building the due diligence team, the emphasis should be on experience and competencies rather than personalities.

The combined experience and competencies should leave management confident that there will be no issues dealing with the legal, financial, and technical challenges that arise during due diligence.

When drawing up the due diligence process with the core team, establish if there might be any complexities that could be beyond the team’s capabilities.

Examples might include a requirement for expertise in intellectual property law, FDA regulation, or even the specifics of mezzanine finance, which usually requires specialist knowledge.

The following are some factors to consider when choosing members of the group:

  • The team should have professionals from the business, finance, legal fields, and other functional fields. Ensure they have experience and skills in M&A matters.
  • Even if they come from varying and complementary fields, your team members must speak the same language to ensure ease of interaction and communication in the project.
  • The team should have a diligence leader or any other individual tasked with managing the process and being responsible for the final result.

Remember, the above members are just the essential members, and you can include other professionals like an IT technician or others you deem necessary.

There's no limit to the number of individuals you can have on the team. But you should have a small manageable group and use fair resource management to prevent burnout since a large team can end up uncoordinated.

M&A Team Structure & Hiring

The more complex a deal, the higher the likelihood that specialists will need to be drafted in for at least some of the due diligence process.

Ideally, these specialists will be involved from the outset in designing the due diligence process - being acutely aware of which documents to look for, how long each should take, and who to speak to at the target company.

The hiring of specialists is, in and of itself, part of the design of the due diligence process.

Most will cost several hundred dollars an hour, quickly running up bills that make the M&A process a more expensive one.

3. Have a Project Manager

You must have a project manager as part of your M&A due diligence team.

Their role will be to ensure the process is executed well based on how you've designed it and only deviate from the set outline when there's a significant change.

Ensure the manager you choose has experience in managing M&A teams.

Remember, the project management in the due diligence phase will affect the post-merger relationship because of the various dependencies.

A good project manager will help you keep your team on track, focused, and successful. 

Furthermore, your project manager lays the foundation for the rest of the implementation in the M&A, including developing the strategy, conducting negotiations, and contributing to closing the deal.

An experienced project manager is seasoned and will avoid any negotiation errors that may cause your M&A business deal to fail.

4. Outsource Technical Tasks to Professionals

Your M&A team doesn't have to be entirely in-house—you can seek outside help.

According to experts, external sources are the best for the due diligence process because they have independent thinking and are objective throughout the process.

It's also a perfect choice when your current workforce doesn't have the qualifications, skills, expertise, or experience required for the exercise.

However, you must be careful with the company you choose.

An M&A due diligence can quickly go wrong if you choose an outside company that has no loyalty to you as a customer. Ensure you vet the company properly or use someone you've worked with previously.

For tremendous success, ensure the external help works closely with your in-house employees.

5. Prepare for Teamwork

With the in-house team and hired specialists that have been chosen, how does a company make them gel?

After carefully selecting your M&A team, you must prepare them for the task ahead. Tell them about the aspects of the specific M&A deal you're considering, such as the structure, features, and economics.

This will bring them up to speed and allow them to schedule their activities and plan the due diligence process based on their order of priorities.

Likewise, if you have a strict timeline or resource limit, you must tell them beforehand so they can factor it into their schedule and adjust accordingly.

You cannot change the personalities of team members in due diligence. You can only put in place the conditions to make sure everyone has what they need at their disposal, delegated responsibility, regular status updates, and the right tools.

Below, we touch on each of these in more detail.

Working Conditions

One of the issues that constantly arises during M&A processes is that day-to-day operations suffer as the companies work tirelessly to get the deals over the line.

Believing that the involvement of employees in due diligence can be taken for granted is a shortcut to their performance dropping off, and ultimately, value destruction.

Instead, employees working on due diligence need to be compensated accordingly.

A bonus based on deal success, or even stock options are some of the issues that need to be considered. The extra responsibility should also endow the employees with a sense of ownership in the deal’s success.

Delegated Responsibility

One of the key issues playing into the quality of teamwork during due diligence is the fact that work is delegated among each of the due diligence teams.

This feeds into each team member’s motivation and speeds up the individual components of due diligence because a single team member isn’t trying to do ten things at once.

Where possible, it should be made clear to everyone in the organization that the due diligence team each has a license to ask for assistance or documents in certain areas.

This reduces bottlenecks within the organization which sometimes occur when, say, the due diligence team can’t obtain documents from a department.

Regular Status Updates

It goes without saying that the due diligence process should be characterized by regular communication.

When designing the due diligence process, set a biweekly meeting with the entire team to go through the progress until that point, raise any concerns that have appeared with the process, and talk about the next steps.

In the spirit of good teamwork, the conversation should be open and frank. If team members need others to work faster, team meetings are a good time to say so - in a constructive way.

The status updates are also a good way to share ideas about the due diligence which might not have been apparent as it was first being drawn up.

The Right Tools

All of the above are brought together by using the right tools.

A good M&A project management tool such as DealRoom - or any other with similar capabilities -  ensures the process runs in a timely manner, that communication is constant, that everybody knows their own responsibilities, and that it’s clear where the process is in its timeline.

DealRoom can also be shared with the target company’s due diligence team (or the buyer’s) so that documents and communication all happen on one platform, rather than a disparate group of emails and project management tools like Slack or Teamly, which are ill-equipped for the demands of thorough due diligence.

6. Gather the Requisite Data

Data collection is an easy part of the due diligence exercise.

The challenge is getting this data from the source to make it usable in your decision-making. To simplify the process, your team should prepare the data and information requests.

This data isn't limited to the company's management but also other departments and third parties like regulatory firms, distributors, agencies, and suppliers.

Covering all grounds is critical to making a prudent M&A decision. You may also consider using modernized diligence management for greater efficiency.

7. Use a Due Diligence Checklist

You should consider using a due diligence checklist, which is an organized way to analyze the selling company.

A checklist ensures you pay attention to everything and helps you understand whether the company is good for business.

due diligence playbook


Teamwork is the glue that holds due diligence together. With team members possessing different backgrounds, specialties, and personality traits, there needs to be a solid plan for how to bring them together and make it all work.

DealRoom’s M&A project management platform has been built with collaboration at the front of our thinking. Talk to us today about how it can enhance your team’s collaboration on M&A due diligence.

due diligence software

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