How automatable are tasks in Due Diligence?

Every company is pushing the digitalization of business processes. But what about the digitalization possibilities in the M&A process. What is the current status of the automation possibilities? This article is intended to give a brief overview based on selected tasks in the due diligence phase.

Target Due Diligence

This task can be partially automated. Individual actions can be partially automated. Details can be found in the individual subtasks. Activity control is often carried out using project control applications. These can be generic tools such as MS Project or project management tools or data room application systems specialized in the management of M&A projects.

Valuation calculation of the target without synergies

This task can be partially automated. Automated tools are available for the "Calculate evaluation" action, but the data usually has to be compiled and cleaned manually.

Financial due diligence

This task can be partially automated. Usually, financial data is extracted from existing ERP solutions of the target and stored as documents in data room application systems. Evaluations of this data are performed using MS Excel or specialized evaluation calculation applications.

Legal due diligence

This task can be partially automated. Fully automated tools are available for individual actions, such as the automatic analysis of contract documents. Other actions such as the evaluation and assessment of contracts must not be automated.

Tax due diligence

This task can be partially automated. While data can be extracted from existing ERP solutions, no automated evaluation of tax information is performed.

Operations Due Diligence

This task can be partially automated. Individual actions can be partially automated. Details can be found in the individual subtasks.

Due-Diligence of the production

This task can be partially automated. The action control is usually not automated. Individual actions can be automated.

Human resources due diligence

This task can be partially automated. The analysis of contractual documents, such as employment contract templates, can be automated.

IT due diligence

This task can be partially automated. There are several automated tools for network scanning and inventory creation, as well as vulnerability scanning tools, which today often completely automate manual actions.



Due diligence of intellectual property

This task can be partially automated. There are automated tools for individual actions, e.g. for scanning contracts, which today often completely automate manually executed actions.

Cultural due diligence

This task can be partially automated. The analysis of the sentiment of employees and former employees on social networks and rating portals can be automated. The action "Survey of the cultural status of the target" can be automated.

Business model due diligence

This task can be partially automated. There are tools for semi-automated creation and management of business models. The action "Check the business model" can be automated, but is usually not performed automatically.

Due diligence of the target strategy

This task can be partially automated. However, there are only a few actions for which tools are available. Since strategies today are usually not managed and updated in application systems, automated analysis and evaluation is difficult.

This is an excerpt of my new book “Automation of Mergers and Acquisitions“.

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