Beyond the information memorandum: what operational due diligence should test.

An information memorandum describes a business. Operational due diligence tests whether it works that way, and whether it will keep working after completion.

Why it matters more now

Half of adviser-led UK mid-market sales take six to twelve months from mandate to completion.¹ The operational work is often compressed into a few weeks of exclusivity, alongside financial and legal diligence. What is not tested then tends to surface after completion, when it is harder and more expensive to address.

Five areas to test

1. Key people. Which decisions, relationships and know-how sit with one or two individuals, and are they staying?
2. Processes and controls. Are the core processes documented, followed and evidenced, or held together by workarounds?
3. Systems and data. Which systems the business depends on, who owns them, and where data is re-keyed or adjusted by hand.
4. KPI reconciliation. Do the metrics in the information memorandum tie back to the systems that produce them?
5. Separation and Day 1. On a carve-out, what actually transfers, and what stays behind in shared services?

The question is not whether the business works today. It is whether it will work under new ownership.

What good output looks like

Findings ranked by their impact on value, each traced to a specific process, control or person. A risk register the deal team can use in negotiation and in the sale and purchase agreement. And a baseline operating model that the 100-day plan can start from, rather than rebuilding it after completion.