The due diligence process – Guiding principles for early stage innovative products
AbstractMergers and acquisitions of small, innovative firms require special treatment of the due diligence process. The asymmetry in organisational order of magnitude would otherwise force the smaller, ‘target’ venture to become a puppet in the hands of the larger, often multinational company. The aim of this paper is to provide a guideline for smaller, new technology-based firms to face the power disequilibrium. After a brief introduction on the nature of the due diligence process, the paper will discuss dangers of due diligence as perceived by both the disclosing and the receiving party. Special attention will be paid to the concepts of the White Room, the White Book and the need for gradually increasing disclosure of one party and growing commitment – both financially and contractually – of the other. For each phase of the due diligence process, content of the disclosure is discussed, as well as legal, financial and procedural aspects.
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Bibliographic InfoPaper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2006016.
Length: 18 pages
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Due diligence; Innovation; Early stage; New technology-based firm;
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- Zacharakis, Andrew L. & Meyer, G. Dale, 1998. "A lack of insight: do venture capitalists really understand their own decision process?," Journal of Business Venturing, Elsevier, vol. 13(1), pages 57-76, January.
- Angwin, Duncan, 2001. "Mergers and acquisitions across European borders: National perspectives on preacquisition due diligence and the use of professional advisers," Journal of World Business, Elsevier, Elsevier, vol. 36(1), pages 32-57, April.
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