Management
Your team determines your outcome.
Due diligence of management when buying a business involves assessing the leadership team's experience, track record, and alignment with the buyer's vision. Careful examination of their decision-making processes, communication style, and overall operating philosophy reveals how effectively they manage the business and their potential to drive future success.
Assessing the Quality of Management—Background and Classification: Who Are They?
What type of manager is leading the company?
What are the effects on the business of bringing in outside management?
Is the manager a lion or a hyena?
How did the manager rise to lead the business?
How are senior managers compensated, and how did they gain their ownership interest?
Have the managers been buying or selling the stock?
Assessing the Quality of Management—Competence: How Management Operates the Business
Does the CEO manage the business to benefit all stakeholders?
Does the management team improve its operations day- to- day or does it use a strategic plan to conduct its business?
Do the CEO and CFO issue guidance regarding earnings?
Is the business managed in a centralized or decentralized way?
Does management value its employees?
Does the management team know how to hire well?
Does the management team focus on cutting unnecessary costs?
Are the CEO and CFO disciplined in making capital- allocation decisions?
Do the CEO and CFO buy back stock opportunistically?
Assessing the Quality of Management—Positive and Negative Traits
Does the CEO love the money or the business?
Can you identify a moment of integrity for the manager?
Are managers clear and consistent in their communications and actions with stakeholders?
Does management think independently and remain unswayed by what others in their industry are doing?
Is the CEO self-promoting?