M&A due diligence changing in wake of new risks

Author: Olly Jackson | Published: 21 May 2018

Brexit, Trump; the updated Payment Services Directive (PSD2) and cyber security: financial services firms face more risks than at any time in recent memory. To address this, the conventional way of conducting due diligence is changing to keep up. For those in the financial services sector and, indeed companies in other industries, due diligence is even more critical than before.

Traditional due diligence, solely looking at the target company’s balance sheet, is no longer adequate to deal with the multitude of risks ready to cause problems. New style due diligence, according to EY partner Arjan Groen, is more forward-looking and about testing value creation hypotheses. This means that questions must be asked if the operation is fit for purpose in the current climate, considering sector-specific changes as well as more general risks that effect a wide number of sectors.

The main issues to take into account when conducting due...