LOOKING BEYOND THE NUMBERS: THE NEED FOR STRONG OPERATIONAL DUE DILIGENCE

To be competitive and relevant in today’s current market environment, it is increasingly necessary for organisations to seek new partners, markets and acquisition targets for them to sell their goods and services. Often, organisations must look beyond their own borders and focus their attention on foreign markets. This global expansion approach brings with it entirely new risks. The need to conduct effective and efficient due diligence is imperative. Historically, due diligence has emphasised the financial aspects of a transaction, neglecting to focus on the potential operational, regulatory and reputational risks that one can confront.

The ‘Financial Crisis’, Madoff and the ‘Global Sovereign Debt’ predicament has ushered in a new age of scrutiny. This scrutiny is manifesting itself in many forms. Organisations must now address growing interest and concerns from investors, regulatory bodies, employees, partners, public interest groups, the media and the plaintiff’s bar. All parties circle their proverbial ‘wagons’ around the organisation and bombard the organisation with their own agendas. Historically, when an organisation had to address a single attack it would be a stress on operations and internal resources. The possibility of reacting to simultaneous attacks on different fronts is forcing organisations to address how they conduct themselves in the global market place.

Organisations are now increasingly becoming self-reflective and are being forced to ask themselves the most basic of questions: Do we really know with whom we are doing business?

Jan-Mar 2013 Issue

Berkeley Research Group