During due diligence most companies will present you with their formal documents including HR manuals, procedures, financials and organizational charts. It’s not enough to rely on these documents alone; if you want to know what a company is really like, you’ll have to dig a bit deeper. One way to go beyond the surface is to have functional leaders from your organization ask their counterparts in the seller’s organization to explain the following questions:
- What is the company’s organizational structure?
- Walk me through the process from receiving an order to getting paid?
We usually do this during lunch when they are out of the office and have them draw or write it out on a sheet of paper. These more casual conversations provide great insight into the actual workings of the company.
We once had an employee draw an organizational chart with a zookeeper and various animals. We found out that it was a direct report to the CEO who controlled the business and had generated a tremendous amount of animosity among the rest of the staff. This piece of information became vital to our integration planning. We would have never learned that if we had only relied on the formal documents that were provided.