Browsing by Author "Bhagwan, Vivek"

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    A management tool for the due diligence stage of M&A transactions
    (Stellenbosch : Stellenbosch University, 2020-03) Bhagwan, Vivek; Grobbelaar, Sara; Bam, Wouter; Stellenbosch University. Faculty of Industrial Engineering. Dept. of Industrial Engineering.
    ENGLISH ABSTRACT: Organisations are under constant pressure to sustain themselves and grow in an environment that is characterised by increasing competition, a changing socio-economic landscape, and shrinking geographical boundaries. In order to remain a player or an industry leader, it is imperitave for companies to achieve real growth. Mergers and Acquisitions (M&A) is an external mechanism for organisations to achieve real growth. There are different stages in a typical M&A transaction. In this regard, the due diligence stage of a M&A transaction is a critical intitial stage to evaluatinging whether or not to proceed with a deal. Further, it provides essential information that is used in setting negotiating parameters, determining bid prices and providing a basis for initial integration recommendations. A higher probability of success can be secured for a deal in circumstances where the due diligence stage of a M&A transaction is managed effectively. This research aims to solve three key issues within a M&A deal by focussing on the due diligence stage. Firstly, this research aims to provide a systematic approach to managing the due diligence process. Secondly, this research aims to address the significant constraints, specifically cost and time, facing the due diligence process. Lastly, this research endeavours to address the risk factors associated with an M&A deal. By addressing these three issues in combination, this research aims to increase the probability of success for a deal by ensuring that the due diligence process is adequate and comprehensive. To address these aims, this research develops a conceptual framework and due diligence management tool for the due diligence stage of M&A transactions. The outcomes of two literature reviews are used to develop a conceptual framework. To assist in the development of the framework, a Grounded Theory Methodology is followed. In this regard Jabareen’s Conceptual Framework Analysis method is employed. The eight phases in this method are covered systematically throughout this research to develop the conceptual framework. The conceptual framework consists of four components. The two core components of the framework provide the user with guidelines and best practices for managing the due diligence process and conducting the due diligence review, whilst the two minor components of the framework illustrate how the due diligence stage of a M&A transaction should support the overall deal, both before and after the deal is completed. The conceptual framework is validated through the outcomes of semi-structured interviews which are conducted with professionals working within the M&A field. The feedback from these interviews are used to address any issues and implement practical industry procedures within the framework. The validated framework is used in conjunction with Gillman’s Integrated Due Diligence Approach to create the due diligence management tool. The tool enables users to design a due diligence process which is specific to the needs of that transaction whilst ensuring that all important aspects required to ensure the success of a transaction are considered. The tool is evaluated through the application of a case study involving a M&A transaction in the engineering industry in South Africa. The unique contribution of this study is in the form of the conceptual framework and the due diligence management tool. The systematic approach used in the development of the framework and the management tool allows for further development and expansion. It is recommended that future work focus on the implementation of the management tool, with a view to refining the effectiveness of the tool.