Comment by foobiekr - Hacker Neue

foobiekr Mar 21, 2021 parent

I have personally done a lot of DD and I will tell you that, while I am aggressive because I assume people are lying to me and maybe themselves, 99% of the time when I’ve done a tandem DD the other technilogists onvolved basically just feign interest and give a gut feel. I’ve also been on the receiving end of DD and witnessed this.

I think you are dramatically overestimating the quality, depth and especially the diligence of that process.

wjnc Mar 21, 2021

This. One of the more fun things I've done professionally is trying to prepare an after-action report on a deal gone south. Reasonably small deal but 95%+ loss of value. I couldn't even get people to come to a shared baseline factsheet. We've done 10s of deals together, the firm prides itself on openness and is generally relaxed. Even with all the internal memos and external red flag reports in hand, we couldn't get to a shared sense of what happened, let alone if we dropped a ball. Point being: DD is hard even for well-established teams and hindsight is 20/20.

pas Mar 21, 2021

Wow, this sounds very interesting, but I simply lack the context to understand this. Could you perhaps explain it a bit? What's and after-action report? How many people you would have needed to agree on said facts? How should one imagine this "couldn't get to a shared sense of what happened"? This means that everyone had their own very detailed theory that then seemed off for the others (because some facts were excluded, interpreted differently, weighted differently by others)?

wjnc Mar 22, 2021

What I tried to do was after the loss became clear (let's say 90% of the customers walked, instanteneously and for us: unexpectedly / it's not in SV-tech), create a setting in which all involved could collaborate on a memo for the Board explaining what happened and if we could have reasonably seen it coming and whether we needed changes to our approach.

We couldn't get the basic facts straight. One thought what happened was a risk mentioned in legal DD, only we weighed it wrong. Another saw it as being duped by an active competitor. Another was on the told-you-so-all-along train. This is like hours of meetings with people getting their managers on board to prevent things from being written. General large corp hostilities.

The fun part is, these are all people from different teams, with different backgrounds. We were and still are working together on multiple transactions, with fun and camaraderie. We just couldn't get the blindfolds off.

And that's what leads me to concluding how hard DD is. We've got processess. External advisors. Teams with experience with the work and each other. Then something goes wrong, you try the Challenger-approach and get nowhere.

pas Mar 22, 2021

Thanks! It's always so easy to see these dysfunctional group dynamics in other groups, point fingers, and even when we have the hindsight of history with such prominent events as the Rogers Commission.

foobiekr OP Mar 21, 2021

I've never done one of these (except on my own company), it sounds interesting. I can think of several companies where I'd love to know WTF the investors were thinking, though.

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