“Self” Due Diligence Critical for Companies Involved in Mergers and Acquisitions

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Much due diligence typically goes into an M&A deal, yet an important element is often overlooked – In-depth background checks on key executives involved in the transaction.

As companies prepare to be acquired, sold, merged, go public or raise capital, they should always do background checks on their own executives. A deal could hinge on what potential investors learn about your C-Level executives. And if it falls through, you may never know why because you never saw the report.

In the M&A due diligence process, a release is not required to conduct background checks nor is there any obligation to share information in the reports. This is different from pre-employment checks where signed releases are required.

“It is therefore better to check out your own executives so you’ll know upfront what it will reveal and how best to handle it,” says Michael Levien, a founding partner of LexPRO Research, a high level due diligence and background investigations firm. It is recommended that companies in the M&A marketplace and/or seeking financing should:

  • Ask if background checks are being conducted and on whom.
  • If reports are being run, ask to see them.
  • Ask for the opportunity to correct inaccuracies and explain any negative information.

Background reports can contain errors and these checks present the opportunity to refute or augment the results and protect one’s reputation. A mistake could be as simple as someone else with the same name having negative information that mistakenly ends up in the report.

From: LexPRO Research


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