THE IMPORTANCE OF BEING DILIGENT

The buzzword here is caution.  Information about companies isn’t as freely available, thus more risk is perceived, making buyers more cautious about undertaking transaction.  Clients will be insisting for greater details due to heightened caution, making information–gathering processes longer.

Company’s value can be difficult to be established fairly and accurately because of market volatility.  The gap between a buyer’s off and a seller’s price widened.

Due diligence exercises have become more detailed.  Greater caution is being seen vis-à-vis projection where even minor aspects are under the microscope.  Strategies are definitely shifting.  The demand for more detailed information that could even extend to individual personal histories and tax profiles.

Before the global financial crisis, due diligence took less time. Company’s general financial matters come under intense scrutiny.  There are at least 10 other areas being examined in more detail:

1)      Commercial

2)      HR

3)      Company synergies

4)      Forecasts

5)      Credit Records

6)      Assets

7)      Deal Economics

8)      Post-deal risk mitigation

9)      Policies & Procedures

10)  Risk

Due diligence is carried out by many parties.  Carrying out due diligence helps identify problems or shortfalls that can be effectively addressed by the seller.  Advantages when due diligence is carried out by those who want to sell their business:

·         Identified possible problem areas can be ratified.

·         Potential buyer is less, likely to have to deal with “surprise” during sales process

·         Can substantially reduce the time taken to complete the deal

·         Seen as an attempt at better transparency and more serious about the deal.

Different buyers look for different things.  Due diligence basically gives an assessment of the health of an asset from various standpoints:

·         Financial

·         Operational

·         Regulatory

The role of due diligence advisor help provide additional, unexpected perspective of risk.  Sometimes, in dealing with details, the big picture slips under the radar.  Good advisor can contextualise the information in relation to current market events and industry performance highlighting serious implications or adverse impacts.

People are taking more time and become more discerning about the kind of due diligence that is being conducted.  They are looking for more details and applying deeper analysis before making any commitments.  Companies have adopted a wait and see approach, with caution the overriding factor in all transactions.

Focus will still be on cash flows and working capital.  Even so, a certain amount of anticipation need to be applied so that future hot spots can be identified and rectified.  Due diligence should also ideally lead to better understanding of the business and assessment of its long-term potential

                                                Shared from article by

                                                            Majella Gomes          

                                                            The importance of Being Diligent

                                                            Accountants Today

                                                            September 2009

A LITTLE PRESSURE

Pressure is a Privilege

Pressure is a privilege because it means there is something expected of you.  There is an expectation of you to ‘perform’ – to take some kind of action producing an anticipated outcome.

Pressure is often viewed as a negative force in our lives.  Undue pressure can be an enormous cause of stress and turmoil.  Each challenge that comes along also presents important questions that test our character, our approach to leadership, and our approach to life

The opportunity to perform under pressure, and to meet or exceed expectations is key to lifting our contribution profile over time.

If we want to win in life and leadership, we can’t skirt pressures by playing it safe

Ultimately, you can’t win if you don’t play.  When faced with exciting scenarios and situations, dealing with the stress that they bring can lead us to be more alert, alive and attentive.  It help to improve performance

WHY PRESSURE MAKES IT BETTER?

1.       Pressure makes us better

·         “necessity is the mother of invention.”

·         “pressure is the mother of performance.”

·         “Life begins at the edge of your comfort zone.”

2.      Pressure challenges us to stay honest

·         we are forced to think creatively and to problem solve on-demand

·         Embrace pressure as a challenge to uphold your character

3.       Pressure helps us engage with life more meaningfully

·         embrace all aspects of our life and leadership journey

·         “Failure is the condiment that gives success its flavor.”

Pressure gives us the opportunity to experience the joys and pitfalls of life more fully and to savor them more completely.  There is such a thing as too much pressure.  You need to balance high-pressure periods with plenty of time for rest, reflection and recuperation.

Pressure can come from many different directions at once.  When you find yourself shrinking under stress, take a moment to be mindful and recognize that pressure can, indeed, be a privilege.

 

References

1.       http://conantleadership.com/3-important-reasons-why-pressure-is-a-privilege/

2.      http://www.wholeheartedleaders.com/?p=585

3.       Article by Richard Branson, pressure is a privilege, the original disruptor, SMEBiz, Monday 21 December 2015