The ability to execute due diligence effectively is a crucial aspect of the M&A process. A thorough understanding of the most frequently asked questions and answers on due diligence will ensure that you are able to determine the potential risks and make an informed investment.
What is your approach to resolving discrepancies during the due diligence process?
The interviewer is looking for what you would do in a situation where there is a discrepancy between public records and internal documents. They want to know your ability to pinpoint the issue, conduct the required investigation, and then act to address it. This question also tests your attention to detail and your ability to work under pressure deadlines.
How do you judge the quality of financial data for a business?
The objective of the buy-side is to determine whether the target company can generate enough revenues to pay off its debt and other obligations. This is done by analysing the cash flow of the business and comparing it against its counterparts. It is essential to comprehend the company’s assets (accounts www.bydataroom.com/ receivable and inventory) and liabilities (accrued payroll accounts payable, accounts receivable and accrued interest).
What steps do you take to protect confidential information during due diligence investigations?
