In a seller’s market, transactions are fast-paced; deals are closed with less information than is ideal, and the risks are high. In a buyer’s market, risk is weighed more carefully. Private equity and strategic buyers have significantly different requirements around due diligence. A financial buyer’s interest may be limited to only those risks that impact valuation, whereas corporate buyers need to consider factors that have long-term implications.
Due diligence and deal flow
Providing due diligence for this dynamic marketplace requires real-world, practical, and tactical experience. At Mercer, we’ve developed a comprehensive road map to guide clients through the M&A process. We’ve set up frameworks that help clients recognize risks and examine potential financial, fiscal, legal, operational, and administrative pitfalls. Our HR expertise allows us to identify human capital risks, including management team and key employee compensation, pension risks, high employee turnover, difficult labor relations, and local regulations.
Reverse due diligence
A seller’s view of a transaction differs significantly from a buyer’s. Sellers need to take a level, objective view of the proposed transaction to correctly identify issues and red flags — and that’s something many sellers aren’t capable of doing. Mercer helps sellers identify ring fences and risk, and quantify liabilities so they can proactively mitigate or reverse issues to maximize monetization upon exit.
Global resources and compressed timeframes
Mercer’s global footprint means we can have due diligence experts on site in as little as 24 hours. Having resources who speak the language and know the local laws is a distinct advantage. It allows us to perform due diligence quickly and more accurately, which is vital during a seller’s market.
Mercer provides hard-nosed, timely, and in-depth information to buyers and sellers for both private equity firms and corporations. Unlike some firms that merely include HR due diligence as a service, it’s our core competence. We have firsthand, hard-won experience across the full spectrum of HR disciplines, and, of course, we have the ability to perform due diligence on everything that hits a firm’s balance sheet related to human capital.