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13 December 2013

Due diligence "most tedious part" of M&A process

Content team

Almost two in five mergers and acquisitions (M&A) bankers say that due diligence is the most boring part of their jobs.

This is according to a survey from Intralinks DealNexus, a professional network and marketplace for those working in M&A.

Over 2,000 professionals took part in the survey, with over 70 per cent based in North America, and negotiating came out as the most enjoyable process, followed by closing deals.

However, 37.9 per cent said that due diligence is the most tedious part of their duties.

Due to regulatory changes, diligence has never been more important and processes are taking longer than ever.

In October, Jonathan Rowley, head M&A for the Emea regions at Swiss investment banking group UBS, said: "It has never felt easy or quick, and there has been lots of scrutiny on transactions at most points in the cycle.

"However, I do think expectations for diligence have gone up, and the desire to really follow through on all issues and thoroughly understand the risks has increased."

The second most boring task was found to be preparing documents for deal markets, with 31.8 per cent of the vote, while third dullest was pitching to a prospective client.

Last month, Intralinks Holdings published a study which found that those involved in M&A typically enjoyed greater success from their deals after they had taken greater time to conduct thorough and full due diligence.

Interviews by the body uncovered that longer due diligence gives buyers better information on companies which can then be used to negotiate a more favourable deal.

Professor Scott Moeller, director of the M&A Research Centre at City University London's Cass Business School, said the research indicates that the longer a person spends conducting checks, the more likely they are to gain a realistic view of a potential deal's valuation.

On average, due diligence in the M&A process takes 124 days to complete, the study also found.

Content team, Bureau van Dijk

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