Deal or no deal: Can busted M&A deals be avoided?
By identifying targets with low quality financial reporting early, CFOs can factor in the potential added costs and decide if the deal is one they should continue to pursue.
It’s one of a CFO’s worst nightmares. A possible acquisition is identified; initial due diligence is completed; a price is negotiated; an acquisition deal is signed; and then for some unforeseen reason, the M&A deal falls apart. Why? And, more importantly, could the nightmare have been avoided?
In this issue of CFO Insights, we’ll introduce new research by Hollis Skaife, professor from the University of Wisconsin-Madison and a Deloitte Fellow and Scholar, and Daniel Wangerin of Michigan State University, that looks at what impact low quality financial reporting may have on the outcome of M&A deals – and offers a metric that may capture its existence before a deal closes.