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A senior project manager, consultant, and business analyst for CWO Consultants, Cox Owen has built a career of more than a decade on project management. Cox Owen has extensive experience in trading, project management, due diligence, accounting, and risk, compliance.
In the financial industry, operational due diligence is an important part of overall due diligence. It involves understanding the operations and business model of a target company when undertaking a merger or acquisition. Like any form of due diligence, operational due diligence is essential for gauging risk exposure.
Engaging in operational due diligence gives an important overview and increased understanding of the target company’s perceived strengths and weaknesses as related to its operations. It also allows for a more complete understanding of the future direction of the company.
The framework of operational due diligence can be easily divided up into six main areas. These are people and organization, cost and assets, IT and systems, potential, scalability, and risk. Looking at operational due diligence is particularly important in a bear market. Poor discipline in management or an unclear business model can prove disastrous in such an instance.
