We are evaluating acquisition targets. Who performs due diligence?

Evaluating an acquisition target requires a multidisciplinary team to ensure no stone is left unturned. Depending on the size of the deal and the company's resources, due diligence is typically performed by a combination of internal teams and external specialists.

Here is a breakdown of who handles the different pillars of the due diligence process:

• Corporate Development / M&A Team acts as the internal quarterback, coordinating the entire process, setting timelines, managing the data room, and synthesizing findings from all other workstreams.
• Financial and Accounting Advisors (often external CPAs or specialized transaction services firms) audit the target's financial statements, quality of earnings, working capital requirements, and tax compliance.
• Legal Counsel (internal and external attorneys) reviews contracts, corporate governance documents, pending or past litigation, intellectual property rights, and regulatory compliance.
• Operational and HR Specialists analyze organizational charts, employee compensation, benefit plans, key-person dependencies, IT infrastructure, supply chain stability, and operational efficiencies.
• Commercial and Market Consultants evaluate the target’s competitive landscape, market share, customer concentration, pricing power, and growth projections.
• Environmental, Health, and Safety (EHS) Experts (for manufacturing, industrial, or real estate-heavy targets) inspect facilities for regulatory compliance and environmental liabilities.

Would you like me to dive deeper into how to structure a due diligence checklist or provide advice on managing external advisors for your specific industry?

In an acquisition, the buyer typically performs due diligence, using a combination of internal teams and external specialists. The goal is to validate the investment thesis, identify risks, confirm valuation assumptions, and determine whether (and on what terms) to complete the deal.

A typical due diligence team includes:

The exact team depends on the size and type of acquisition:

• Small business acquisition: often the buyer, an attorney, CPA, and possibly a financial advisor handle most diligence.
• Middle-market acquisition: commonly involves a corporate development team plus accounting, legal, tax, operational, and industry advisors.
• Private equity acquisition: typically has a deal team, operating partners, outside accounting firms, legal counsel, consultants, and industry experts.

The buyer owns the diligence process, but the seller supports it by providing documents, answering questions, and giving access to management, systems, and facilities.

A common structure is:

1. Buyer signs NDA and receives preliminary information.
2. Buyer submits a letter of intent (LOI).
3. Buyer launches diligence workstreams.
4. Findings affect valuation, deal terms, representations/warranties, indemnities, and whether to close.

If you are building an acquisition program, a practical starting team is usually: deal lead + finance/QoE advisor + M&A attorney + tax advisor + operating subject-matter experts.

In an acquisition, the buyer is ultimately responsible for due diligence, but the actual work is usually divided among the buyer’s internal team and outside specialists. It is typically a multidisciplinary effort rather than one person or firm.

Who does what?

Large transaction-advisory firms such as Deloitte and EY offer multidisciplinary buy-side diligence covering financial, tax, commercial, operational, technology, HR and other areas.

For an acquisition target, a typical setup

If you are the acquiring company, I'd generally structure it like this:

1. Your deal/M&A lead coordinates the entire diligence process and maintains the overall risk/issues list.
2. Your management team evaluates strategic fit, customers, products, operations and the deal thesis.
3. Outside M&A counsel handles legal diligence and translates findings into purchase-agreement protections.
4. A transaction accounting firm performs financial/QoE diligence.
5. A tax advisor performs tax diligence and advises on transaction structure.
6. Specialists are brought in for technology, cyber, environmental, regulatory, IP, HR, etc., depending on the target.
7. Your investment committee/board ultimately decides whether the identified risks justify proceeding, changing the price, changing the structure, or walking away.

The key point is that you don't outsource responsibility for the decision. You can outsource much of the investigation, but the buyer needs to synthesize the findings and determine whether the acquisition still makes sense. Deloitte similarly describes diligence as potentially being performed by internal teams, external advisors and industry specialists in combination.

If you're evaluating multiple acquisition targets, I can also give you a practical “who does what” diligence team structure and approximate cost by target size (e.g., <$10M, $10–50M, $50–250M enterprise value).

Evaluating acquisition targets requires a multidisciplinary approach. Due diligence is rarely done by just one person or department; instead, it is a coordinated effort involving internal teams, external specialists, and advisors.

Here is a breakdown of who typically performs due diligence during an M&A (Mergers and Acquisitions) process:

• Internal Corporate Development / M&A Team: The internal deal team or corporate development executives project-manage the entire operation. They coordinate the flow of information, collect data from the target, set up the virtual data room (VDR), and synthesize findings from all other workstreams to present a final recommendation to the board or executive leadership.
• Financial and Accounting Advisors: External certified public accountants (CPAs) or specialized financial due diligence (FDD) firms review the target’s historical financials, quality of earnings (QoE), working capital trends, tax liabilities, and internal financial controls.
• Legal Counsel: Internal and external attorneys examine corporate governance documents, material contracts, litigation history, intellectual property (IP) ownership, labor and employment compliance, and regulatory compliance to identify hidden liabilities.
• Operational and Technical Specialists: Operations, supply chain, and IT experts evaluate the target’s operational infrastructure, software architecture, cybersecurity posture, tech stack, and scalability to spot integration hurdles or necessary capital expenditures.
• Human Resources and Compensation Experts: HR due diligence teams review organizational charts, key employee retention risks, compensation structures, benefit plans (including pensions or 401ks), and cultural alignment.
• Specialized Consultants: Depending on the target industry, external specialists may be brought in for niche areas—such as environmental compliance auditors, commercial market researchers, or insurance and risk management advisors.

Would you like me to break down a typical due diligence checklist or outline the phases of the timeline for these teams?

Evaluating an acquisition target requires a multidisciplinary team. Due diligence is rarely done by just one person or department; instead, it is a collaborative effort combining internal specialists and external advisors.

Here is who typically performs due diligence, broken down by their core areas of focus:

• Internal Deal Team / Corporate Development: The internal team (often led by corporate development, the M&A director, or strategy leads) orchestrates the entire process, coordinates information flow, sets the timeline, and synthesizes findings to make the final "go/no-go" recommendation to leadership.
• Financial and Accounting Advisors: External CPAs and financial due diligence (FDD) specialists analyze historical earnings, quality of earnings (QoE), working capital trends, tax compliance, and financial projections to spot hidden liabilities or inflated metrics.
• Legal Counsel: Internal and external lawyers review corporate governance documents, material contracts, pending litigation, regulatory compliance, intellectual property portfolios, and employment/labor agreements to identify legal risks.
• Tax Specialists: Dedicated tax advisors analyze corporate structures, past tax filings, potential audit exposures, and structural implications of the deal (e.g., asset vs. stock purchase).
• Operational and IT Consultants: Technical and operational experts evaluate supply chains, manufacturing facilities, cybersecurity infrastructure, software scalability, and tech debt to ensure systems can integrate smoothly.
• Human Resources and Compensation Experts: HR specialists review employee benefits, pension obligations, key-man dependencies, cultural alignment, and existing employment contracts or retention risks.
• Commercial and Market Analysts: Industry experts or internal strategy teams assess market size, competitive positioning, customer concentration, and growth assumptions underpinning the target's business model.
• Environmental, Health, and Safety (EHS) Specialists: For manufacturing, real estate, or industrial targets, EHS consultants audit compliance with environmental laws, hazardous waste handling, and property contamination risks.

If you'd like, let me know:

• What industry or sector the target operates in
• The approximate size of the acquisition

I can provide a more tailored due diligence checklist for your specific deal.

In an acquisition, the buyer ultimately owns the due-diligence process, but it is usually performed by a combination of the buyer’s internal team and outside specialists. The exact mix depends on deal size, industry, and risk.

Who typically performs it?

Large transaction-advisory firms such as Deloitte, EY-Parthenon, and PwC Deals offer multidisciplinary diligence covering financial, tax, commercial, operational, HR, IT/cyber, and other areas.

The buyer's role is important

The outside firms don't replace the acquirer's judgment. The buyer's CEO/CFO, corporate development/M&A team, business-unit leaders, and sometimes board typically determine what questions need to be answered and make the ultimate go/no-go and valuation decisions. In practice, the buyer coordinates the various workstreams and integrates their findings.

For example, a typical middle-market acquisition might look like:

Acquirer / Corp Dev → coordinates diligence and deal thesis
Accounting firm → financial + tax diligence
M&A law firm → legal diligence + purchase agreement
Strategy consultant → commercial/market diligence
Specialists → IT, cyber, environmental, HR, regulatory, etc.
Management team → operational validation, customer/supplier interviews, integration planning

A key distinction is that the seller may provide information and conduct "vendor due diligence," but the buyer conducts its own buy-side diligence before committing to the acquisition.

If you're evaluating acquisition targets, I can also lay out who you should hire for each diligence workstream, what it typically costs, and when to perform each one in the deal process.

In an acquisition, the buyer is ultimately responsible for due diligence, but the work is usually divided among the buyer’s internal team and outside specialists. A comprehensive diligence process is multidisciplinary.

Outside firms such as accounting/advisory firms can coordinate multiple workstreams, but the buyer should retain ownership of the overall diligence conclusion. Deloitte, for example, describes diligence as commonly combining internal teams, external advisors and industry specialists.

A practical acquisition-team structure

For a typical middle-market acquisition, I'd structure it roughly as:

Deal lead / CFO / Corp Dev → coordinates diligence and owns the investment recommendation

M&A attorney → owns legal diligence and translates findings into purchase-agreement protections

Quality-of-earnings firm → independently validates financial performance and working capital

Tax advisor → identifies historical tax exposure and advises on transaction structure

Management / operating team → validates customers, products, operations, personnel and the business plan

Specialists as needed → commercial, IT/cyber, environmental, regulatory, insurance, IP, etc.

The important distinction is that the advisors perform investigations, but the acquirer makes the investment judgment. Their findings can affect valuation, purchase price adjustments, representations and warranties, indemnities, escrow, deal structure, or whether you proceed at all.

If you're evaluating small/middle-market acquisition targets, I can also lay out who you actually need to hire, typical fees, and which diligence workstreams you can reasonably handle in-house.

Evaluating an acquisition target requires a multi-disciplinary team. Due diligence is rarely done by just one person or department; instead, it is a coordinated effort involving internal teams, external specialists, and the leadership board.

Here is a breakdown of who typically performs each major component of the due diligence process:

• Internal Corporate Development & M&A Team : Acts as the project manager, coordinating the overall process, collecting initial data, and synthesizing findings from all workstreams.
• Financial & Accounting Teams (Internal & External Auditors) : Reviews historical financial statements, quality of earnings, tax compliance, working capital requirements, and accounting policies.
• Legal Counsel (Internal & External) : Examines corporate governance documents, material contracts, pending or threatened litigation, intellectual property rights, labor and employment issues, and regulatory compliance.
• Operational & IT Teams : Evaluates the target's physical assets, supply chain, manufacturing capabilities, technology infrastructure, cybersecurity posture, and software scalability.
• Human Resources & Compensation Experts : Assesses organizational structure, key employee retention risks, compensation and benefits packages, pension liabilities, and cultural alignment.
• Commercial & Market Analysts : Analyzes the target's competitive position, customer concentration, market share, pricing power, and industry growth trends.
• Tax Specialists : Identifies potential tax exposures, structuring implications, and historical tax compliance across all operating jurisdictions.
• Environmental, Health, and Safety (EHS) Consultants : Brought in for specific industries (like manufacturing, real estate, or energy) to assess regulatory compliance, site contamination, and liabilities.
• Board of Directors & Executive Leadership : Ultimately responsible for reviewing the compiled findings, evaluating the risk-reward profile, and approving the final transaction.

If you'd like to narrow this down, let me know:

• The industry or sector of the acquisition target
• The approximate deal size or company maturity

I can give you a more tailored breakdown of which specific teams or external advisors are most critical for your situation.

In an acquisition, the buyer is ultimately responsible for due diligence, but it is usually performed by a combination of the buyer’s internal team and outside specialists. The exact mix depends on deal size, complexity, and the buyer’s capabilities.

Typical M&A due-diligence team

Deloitte describes the common model as a combination of internal teams, external advisors, specialists, and experienced industry personnel.

Who "leads" the process?

Usually, the buyer's deal team owns the overall diligence process. That might be:

• Corporate acquisition: CEO/CFO, corporate development/M&A team, business-unit leadership
• Private equity: deal partner/principal + investment team
• Smaller acquisition: owner/CFO/business development person, often with an M&A advisor coordinating specialists

The buyer then engages outside professionals for the areas where specialized expertise or independent verification is needed. Firms such as EY, Deloitte and PwC explicitly offer coordinated buy-side financial, tax, commercial, operational, technology and other diligence services.

A practical rule: don't think of due diligence as "the CPA does it." Think of it as the buyer assembling a diligence team, with the CPA/accounting firm, M&A attorney, and commercial/operational specialists each answering different questions.

If you're evaluating acquisition targets, I can also give you a typical due-diligence team structure by deal size (e.g., $1M, $10M, $50M, $100M+ purchase price) and what you can reasonably handle internally versus outsource.

Evaluating acquisition targets requires a multidisciplinary approach. A successful due diligence process is typically led by the corporate development team or project manager , supported by a mix of internal departments and external professional advisors.

• Internal Deal Team (Corporate Development & M&A) : Acts as the quarterback of the process, coordinating information flow, managing timelines, and synthesizing findings from all workstreams.
• Legal Counsel / Attorneys : Review corporate governance documents, material contracts, litigation history, intellectual property portfolios, regulatory compliance, and employment agreements.
• Financial and Accounting Advisors : Perform the Financial Due Diligence (FDD), analyzing quality of earnings (QoE), working capital trends, historical financial statements, tax compliance, and debt obligations.
• Operational and Technical Teams : Assess manufacturing facilities, supply chains, IT infrastructure, cybersecurity posture, and operational efficiency (often utilizing external tech consultants).
• Human Resources & Compensation Specialists : Evaluate organizational charts, key employee retention risks, employee benefits, pension obligations, and cultural alignment.
• Commercial and Market Consultants : Validate the target's market share, customer concentration, competitive landscape, and growth projections (frequently used for outside-in perspective).
• Environmental, Health, and Safety (EHS) Experts : Inspect physical properties or regulatory compliance for manufacturing, chemical, or heavy industrial targets to uncover potential liabilities.

If you'd like, let me know:

• What industry or sector is the target in?
• What is the approximate size of the transaction?

I can help you tailor a specific due diligence checklist or team structure for your evaluation.