Operational due diligence is crucial to the success of any acquisition. Its purpose is to identify the risks and operational opportunities that could impact the value of the target company.

In the pre-closing phase, it allows the buyer to adjust the price by obtaining a precise vision of the operational levers to create value, and of the risks, and of their impacts on the future economic performance of the target company.

The success of operational due diligence is rooted in three main key factors:

1. A high level of functional and sector-based expertise
   Since this type of analysis is very short, the teams, made up essentially of transaction specialists or strategic consultants, usually fail to understand the complete operational complexity of the target and, consequently, resort to levers that are overly simplistic or that cannot be used in the field. Consequently, more and more funds are relying on specialist agencies, like Argon Consulting, to take charge of their operational due diligence. Our approach relies on mixed teams, made up of functional experts, who have helped numerous companies to change their operations, and consultants specialized in due diligence operations.
2. An analysis process adapted to the deadlines and the stakes
   Due diligence projects usually work to short deadlines and only have limited access to internal information. Therefore, it is necessary to find effective means of accessing critical information, managing project priorities and the allocation of resources in real time and using standard, tried and tested analysis methodologies.
3. Effective management of continuity between pre-closing and post-closing
   Complete buy-in by the management team that is put in place is essential for the effective implementation of the levers for the creation of value identified in the due diligence phase. This buy-in can be obtained by raising the awareness of managers and coaching them, by converting the levers into detailed operational action plans, by setting up adapted indicators and targets and by creating instances to keep track of the state of progress.

The integration strategy is another key factor of a successful acquisition. In the post-closing phase, once the company has been acquired, the results of the due diligence phase must form the starting point of the integration plan and of the business plan to be prepared with management.

The post-merger integration phase (PMI) must include short-term measures for the phases that follow the closing, and longer-term measures for the implementation of the target organization:

• identification of potential synergies and planning of the integration phase,
• development of an integration strategy and deployment of regular tracking measures during the post-merger phase (PMI scorecard),
• management and tracking of the PMI program,
• support for the functional teams involved in the PMI phase.

Argon Consulting helps its investment fund customers with their operational due diligence projects and the implementation of their PMI plans by:

• challenging the operational plan of the target’s management,
• identifying risks and their impacts on performance,
• conducting benchmarks and good practice reviews,
• identifying levers to create value and analyzing their impacts on economic performance,
• building a business plan, including the identified upsides,
• building the PMI plan,
• supporting the PMI and the implementation of the business plan.