Common Questions and Answers on Due Diligence

Common Questions and Answers on Due Diligence

The ability to perform due diligence efficiently is an essential element of the M&A process. Understanding the most commonly asked due diligence-related questions and their answers will help you assess possible risks and make an informed decision.

What strategy do you have to address any discrepancies that occur in the course of due diligence process?

The interviewer is looking for what you would do in an instance where there’s a discrepancy between public records and internal documents. You will be evaluated on your ability to identify an issue, do the necessary research, and then take actions to fix the issue. This test also tests your attention to detail as well as your ability to work within tight deadlines.

How can you judge the quality of financial information for a business?

The objective of the buy-side is to determine if the target company has enough cash flow to pay its debts as well as other obligations. This is accomplished by analyzing the company’s cash flow and comparing it against its competitors. It is important to know the company’s current assets and liabilities.

What steps do you take to protect confidential information while conducting due diligence?

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