The Art of M&A Due Diligence.

• Author: ANDERSON, DEAN
• Position: Brief Article - Review

by Alexandra Reed Lajoux and Charles Elson

Published by McGraw-Hill, New York, 477 pages, $49.95

THOROUGH, comprehensive, sensible, understandable and useful. These adjectives aptly describe The Art of M&A Due Diligence. It's a complete A-to-Z reference guide that helps take the mystery out of the complex and critically important due diligence process.

Today, entire consulting practices have been built around due diligence as the process itself has become increasingly formalized and complicated. But this book effectively organizes the key risk areas into an easy to understand, one stop sourcebook that can help you think through the diligence process in a logical and effective way.

The Art of M&A Due Diligence is also an excellent step-by-step technical guide that contains invaluable strategies and techniques. It boils down the complex and intricate legal and technical aspects of buying a company and transforms it into practical and actionable information. And that makes this book particularly useful for business people with limited M&A experience. Alexandra Reed Lajoux is an expert writer on M&A topics [her previous book, The Art of M&A Integration, was reviewed in the Fall 1998 issue of DIRECTORS & BOARDS], and her co-author Charles Elson is a law and business professor who has written extensively on M&A matters and is also a director of several public corporations.

The Art of M&A Due Diligence can help a first-timer get organized by providing a logical framework to attack and conduct a successful due diligence. In fact, I wish this book had been around earlier in my career, because it would have given me a definite head start in navigating this complex and potentially overwhelming landscape. And the book's abundance of valuable technical information also makes it a good reference manual for the accomplished or practiced M&A professional.

One of the best features of the book is its sample forms (such as a sample acquisition agreement) and comprehensive set of checklists (such as its list of "Red flags to look for in a financial statement"). They provide readers with an excellent road map to help plot a course that surfaces critical risk areas while keeping the endgame in sight.

For example, I found the sample acquisition agreement particularly helpful. It takes you through the technical and legal steps of reps and warranties and puts it in comprehensible terms. It...