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Management Due Diligence is the process of scientifically evaluating the executives who make up the senior management team(s) prior to the close of a business deal that involves integrating the functions and cultures of two or more companies (private equity buyouts, mergers or acquisitions). The process is also known as management assessment.


No prudent executive would think of going forward with a deal unless extensive due diligence has been completed in the areas of legal and finance. Deal-makers often find these concrete issues easier to deal with than the so-called “soft” areas such as those involved with talent management. However, a recent survey indicates that two thirds of respondents believe that poor company performance is either very often or always attributable to management issues.[1] Failure to assess the senior management talent pool from the viewpoint of the new strategic vision can cause the value of the transaction to be under leveraged by millions of dollars and allow major slowdowns in productivity during the transition.

Five key questions the management due diligence process should answer are:

  1. Will this management team be able to execute our growth strategy?
  2. Will the organization’s culture support the objectives or get in the way?
  3. How can we accelerate management’s ability to execute the investment thesis?
  4. Which players do we keep? Who needs to go?
  5. How will this management team partner with us?

Management evaluation is often over-reliant on past performance and references when determining whether an individual or team fits with a company and the expectations for that company. The key is to find a match between leadership and strategic vision. With this information, decisions can be made to ensure the right people are in position to bring the acquisition to maximum profitability without losing valuable time and momentum. [2]

Sources and References

  • Lajoux, A.R., & Elson, C.M. (2000). The Art of M&A Due Diligence. New York: McGraw-Hill
  • Bond Gunning, A. (Ed.). (2007) “Human Capital in Private Equity.” London: mergermarket [3]
  • Harding, D., & Rouse, T. (2007, April). “Human Due Diligence,” Harvard Business Review, 85(4).
  • Astorino, D., (2009). “Five Roadblocks to Successful Acquisition Integration,” Executive Insights, 24(2). [4]


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