Due diligence is consuming all of our leadership team's energy, causing our weekly scorecard metrics to slip and threatening our current quarter Rocks. How do we restructure our Accountability Chart and delegate deal management so our operations do not degrade and give the buyer an excuse to reprice the deal?

Question

Tyler Smith · Accepted Answer

Diligence fatigue is a real threat that can lead to a late-stage price reduction if your operational performance slips. Buyers watch your performance closely during the transaction period. A single down month can be used as leverage to renegotiate the purchase price. To prevent this, you must temporarily adjust your Accountability Chart to insulate your daily operations from the deal process. Create a temporary transaction seat on your Accountability Chart. This seat is solely responsible for managing the buyer's requests, coordinating with your investment bankers, and gathering diligence documents. Usually, the owner or a designated chief financial officer should sit in this seat, freeing up the rest of the leadership team to focus entirely on running the business. Keep your weekly Level 10 Meetings™ sacred. Do not allow transaction updates to hijack the meeting. Use your regular IDS® process to solve operational issues, and track your scorecard metrics with absolute discipline. Your leadership team's primary Rock for the quarter must be to hit the financial forecast, not to close the deal. By isolating the transaction noise and letting your leadership team focus on execution, you maintain your operating leverage. Showing a buyer that your business continues to grow and hit its numbers during a highly disruptive diligence process is the best way to defend your valuation.