Common Questions and Answers on Due Diligence

The ability to execute effective due diligence is a critical element of the M&A Process. Knowing the most commonly asked questions and answers on due diligence will ensure that you’re able assess potential risks and make an informed investment.

What is your plan for resolving discrepancies that arise during the due diligence process?

The interviewer is looking for how you would handle an instance where there’s a discrepancy between public records and internal documents. They are looking for your ability to identify the issue, conduct the required investigation, and then take action to fix it. This question also tests your attention to detail as well as your ability to work within tight deadlines.

How do you assess the quality of financial data for a business?

The goal 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 done by analyzing the company’s cash flow and comparing it to counterparts. It is essential to know the current assets and liabilities.

What are the best ways to safeguard confidential information when conducting a due diligence?