A survey of due diligence practices among Kenyan firms involved in corporate acquisitions, January, 2003 to march,2009
Abstract
This survey was carried out to determine the due diligence practices of Kenyan firms that have
taken part in acquisitions. A self-administered questionnaire was sent to 40 firms sampled and
follow-ups made by phone and email to ensure the maximum possible response rate. 15 firms
responded, making the response rate 37.5%. Frequencies and percentages were mostly used to
analyse the data as these were the most suitable for the type of information generated.
The following areas were considered during this study: Strategic due diligence, human resource
due diligence, operational due diligence, financial due diligence, legal due diligence and IT due
diligence. In each of these areas, the questions were tailored toward finding out the critical
factors examined by the acquiring firms as they carried out due diligence as well as the crucial
areas that were missed out.
Kenyan firms generally have good due diligence practices, especially in strategic due diligence.
There are, however, areas that firms seem to have been glossing over and not examining fully
during their due diligence. Two of these critical areas are human resource and IT where in some
cases as few as 25% of the respondents said that they had examined these critical factors. Also,
only 40% of the respondent firms had checked to ensure that cost-cutting measures undertaken
by the target company in the period leading up to the acquisition were sustainable in the long
run.
Citation
Masters of business administrationSponsorhip
University of NairobiPublisher
School of business,University of Nairobi