The ability to execute effective due diligence is an essential aspect of the M&A Process. Understanding the most commonly asked due diligence-related questions and their answers will help you determine the potential risks, and make a sound decision.
What is your approach to resolving any issues that arise in the due diligence process?
The interviewer wants to know how you would handle when there is an inconsistency between public records and internal documents. They want to know your ability to spot the issue, conduct the necessary investigation, and then act to fix it. This question tests your focus to detail and your performance under pressure.
How can you determine the quality of a company’s financial data?
The goal of the buy-side is to determine whether the company that is being targeted will generate enough income to pay off its debt and other obligations. This is done by analyzing the company’s cash flow and comparing it against its competitors. It is essential to understand the company’s assets as well as liabilities.
What are the steps you can take to safeguard confidential information during a due diligence investigation?