Due Diligence in BusinessAn introspection Vijay Thacker Director, Horwath Consultants India 23 November 2008
Financial Due Diligence - SCORER • Stability – business, financials, funding • Competitiveness – product, pricing, reach, brand etc • Oversight – quality, clarity, compliance, attitude • Reliability – financials, estimates, assumptions • Efficiency – operative, cost, flexibility • Risk – identification, mitigation, balance • Affirm / Adjust Value – affirm value or adjust to be meaningful
Financial Due Diligence -SCARE • Systems and controls – weak, inoperative or strong? • Concentration – is there a core or it there a scatter? • Approach – of care or profligacy? • Relatives – business diversions and dilutions? • Employees – morale, balance, vision, outlook? • Due Diligence must sound alarms!!
Recent Business - Due Diligent?SCARCE • Super Profits sought • Competitive Pulls not resisted • Accountants Ignored • Resources not balanced • Costsallowed to expand • Experience replaced with youthful exuberance • Risks allowed to silently pile-up
Questions to ponder • Did Windfalls become the business plan? • Were Valuations reasonable? Did Value for one become the benchmark for all • Was funding stable and balanced? • Was the business model strong and stable? • Were planning / expansion assumptions reliable? • Were cost efficiencies watched? • Did Greed / Competition overcome Good Sense? • Did Oversight fail?
Finally • Did we lose our respect for Money? • Did we truly value Money?