M&A & Due Diligence

Acquisition strategy analysis happens before a deal is on the table: testing whether a target or a sale makes financial sense and at what price. Due diligence happens once a deal is in motion, reviewing the actual financials, risks, and inconsistencies before close.

Buy-side diligence is performed for the acquirer, evaluating the target. Sell-side diligence is performed for the seller, typically before going to market, to identify and resolve issues before a buyer's diligence team finds them.

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Scoped to the deal, based on transaction size and depth of review required, with a fixed fee set before work begins rather than billed hourly against an open-ended review.

It depends on deal structure and contract type. A stock sale generally leaves the contracting entity intact, so government approval (novation) is typically not required. An asset purchase, or a merger resulting in a different legal entity, generally requires a novation agreement under FAR Subpart 42.12 before contracts can transfer. Contracts awaiting novation approval can face delays in billing and performance in the meantime.

Under SBA affiliation rules, a merger or acquisition can trigger a size recertification. If the combined entity no longer qualifies as a small business, a set-aside contract may not be assumable going forward, though existing options may sometimes still be exercised depending on timing and terms. This is worth assessing during diligence rather than after close.

This is typically negotiated in the purchase agreement, but the underlying liability doesn't disappear with a change of ownership: DCAA can still complete the audit, and the successor entity is often the one managing the outcome. Reviewing open audit years and rate history during diligence quantifies this risk before close rather than after.