Traditional due diligence efforts focus on a potential deal’s financial, legal, and commercial aspects. While important, these do not capture the entire picture.
It’s time to break the conventional parameters and delve into several unexpected areas.
Check out five unconventional items to include in your Commercial Due Diligence Checklist.
1). Employee Satisfaction & Culture
Employee satisfaction and culture can be a big indicator of a company’s health. When looking at a business, look beyond the numbers and see how it treats its employees.
How are they paid? Is there room for growth? Do they have enough resources to do their job well? Do they feel valued by management?
If you are interested in purchasing a business, these are all questions you need answers to before making an offer.
2). Supplier and Partner Relationships
When checking out a company, it’s important to look at its relationships with its suppliers and partners.
This can tell you a lot about how the company is run and how much they value their partners’ opinions. Does the company have a good relationship with its suppliers?
Are they able to easily find replacements when needed? Does the company’s management show any signs of favoritism toward certain partners? You should try to answer these important questions while conducting your due diligence.
3). Social Impact & Sustainability
When conducting due diligence on a company, don’t forget to look at its social impact. What are the company’s CSR initiatives? What does it do for the community? How does it contribute to environmental sustainability?
By reviewing these things and more, you can fully understand how your potential business partner interacts with its customers and community.
4). Digital Footprint & Online Reputation
You have probably heard the old saying, “If you are not on Google, you don’t exist.” Well, it’s true. You need to check out a company’s online reputation before investing.
Is there any negative buzz about the business? What are people saying about it? What are their reviews like? Are they positive or negative? Do they seem authentic?
This is especially important for businesses that operate in a regulated industry or serve vulnerable populations, like those that deal with food (restaurants), medicine (pharmacies), health care (hospitals), or financial services (banks).
5). Innovation Capabilities
Innovation is a key ingredient in any business. It makes it stand out from the crowd and keeps customers coming back for more.
So, when looking at an investment opportunity, you want to ensure that the company you are considering has a history of innovation.
But how do you know if a company has a solid track record? You can start by looking at its Research and Development (R&D) investments, patent registrations, and overall track record of product innovation.
You can do this through public records or by talking to people who work at the company or have previously worked there.
In conclusion, when doing a commercial due diligence check, be sure to consider these five unconventional items.
They might not seem like they would be important, but they are. Sometimes it’s the little things that will make the biggest difference.