Due Diligence: Human Resources – Culture

Performing a thorough due diligence on a potential acquisition is one of the most important tasks that a buyer needs to do when making a purchase decision. We’ve put together a list of items that buyers will want to investigate when talking to a seller.

This is part of a large series. Be sure to scan our Buyers Blog for the category Due Diligence.

Now we’re moving on into evaluating the Human Resources of your potential acquisition portion of your Due Diligence tasks. The purpose of this section is to understand the Culture of the business and how it is different and similar to your existing business culture.

Culture

  • Is there a set of standard policies and procedures that govern most processes? How closely do employees adhere to it?
  • What practices does the company use to retain employees?
  • What types of social functions do employees engage in as a group?
  • Does the company generally promote from within, or from the outside?
  • What types of training does the company require of its employees?
  • What level of customer service is the company accustomed to provide? Does it support “above and beyond” levels of support, and publicize these efforts?
  • What dress code does it allow? Does this vary by location?
  • What type of feedback mechanisms are used to discuss issues about employee performance?
  • How does the company communicate with its employees? Is it a more formal method, such as a monthly newsletter, or more informal employee meetings?
  • What is the physical environment? Does the company emphasize low costs with cheap furnishings, or more expensive surroundings?
  • Is there a sense of urgency in completing tasks, or is the environment more relaxed?

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