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Generally there are 3 types of due diligence. Financial Due Diligence (FDD), Operational Due Diligence (ODD), and Commercial Due Diligence (CDD). All are very different. FDD focused on Quality of Earnings which is basically looking at accounting treatments and identifying adjustments to EBITDA. Most similar to audit but used in a different context. ODD is generally analyzing the cost base of a target and understanding one-time separation/integration costs for business functions (IT, Finance, HR, etc). ODD has the most variation in scope depending on the deal. CDD is focused on the buyer/seller/target’s market and potential revenue growth. Those are gross simplifications but should provide a basic overview.
Agree that IT DD / cyber DD should be there too. It's a very "traditional" way of thinking
CFOs and Heads of M&A that wants a second opinion/ cover-my-*** report on financials and third party review of target for W&I insurance based on the documentation on virtual data room. Depending on which region you are, Digital capabilities and cyber risks could be involved. In the Nordics I have seen Software companies being acquired where acquirer only looked at financials and tax, assuming the software is properly developed.
Audit but in the future rather than the past.
🥱😴
FDD is soul crushing. Other DDs are interesting but brutal hours usually