The accountant’s role in the due diligence process for mergers and acquisitions

Abstract

Purpose: This study aims to analyse the accountant’s role in the due diligence process. Additionally, this study evaluates the issues professionals face when conducting the due diligence exercise. Finally a way forward is proposed to tackle the issues discussed and increase awareness on the research topic. Design: The research study consisted of a qualitative research methodology. The researcher evaluated three M&A cases through semi-structured interviews with high ranking officials from selected firms. Another interview was held with a lawyer to gain a perspective of the legal aspect in the due diligence exercise. Findings: The cases examined presented contradicting views on the subject. One case identified the positive aspects of the due diligence exercise. This is because the company was presented with a reliable report. On the contrary another case discussed the negative aspects of the due diligence, thus identified the problems that the company faced and proposed an alternative way of what could have been done to achieve reliable results. Finally, the third case discussed both sides thus giving the researcher an opportunity to evaluate in detail the exercise and form an opinion on the current situation as well as propose a way forward. Conclusions: Awareness on the subject needs to be addressed. Moreover, it was identified that professionals’ roles are not made clear. This imposes a problem especially since it was also concluded that integration between professionals during the due diligence exercise is kept at a minimum. Value: This study demonstrates that, although due diligence may save a company from undertaking the wrong transaction, it is still not given the required importance. Thus the study is an interesting read as it identifies the current problems and recommends a way forward for a more effective due diligence process.