Select Page

3 Jul 2025 | 0 comments

Strategic due diligence is the comprehensive investigation and analysis of a company or asset before engaging in a major business transaction and whether the target is a good strategic fit and if the transaction will create sustainable value.

Strategic due diligence is the comprehensive investigation and analysis of a company or asset before engaging in a major business transaction, such as a merger, acquisition, investment, or partnership. Unlike financial or legal due diligence—which focus on verifying facts and liabilities—strategic due diligence evaluates whether the target is a good strategic fit and if the transaction will create sustainable value.

Key components of strategic due diligence include:

  • Assessing strategic fit: Analysis of how well the target aligns with the acquirer’s long-term business strategy and objectives, including cultural and operational compatibility.
  • Market and competitive analysis: Evaluation of the industry’s trends, the target’s position within the market, growth opportunities, and threats, as well as potential synergies and competitive advantages.
  • Value creation and deal thesis validation: Examination of whether the underlying assumptions for the deal’s value are realistic and attainable, including whether the deal’s objectives can be met in practice.
  • Risk identification: Uncovering potential risks, liabilities, and integration challenges that could impede the realization of expected benefits.

The process is critical for:

  • Avoiding unforeseen risks and liabilities (such as undisclosed debts or contracts).
  • Informing negotiation strategies and post-deal integration plans.
  • Ensuring that the transaction enhances—not detracts from—the buyer’s strategic goals and competitive position.

In summary, strategic due diligence is an essential, holistic process that gives decision makers clarity on whether a business opportunity or transaction supports their overarching strategic ambitions, and what risks or synergies they must manage to achieve post-deal success.

Related Strategy Theorist: David Howson

A leading theorist associated with the concept of strategic due diligence is David Howson. He is frequently cited for his work on due diligence processes in mergers and acquisitions (M&A), particularly for emphasizing the multidisciplinary and strategic aspects of due diligence beyond just financials. However, it is important to note that the field draws from a broad base of strategic management literature, including concepts from Michael Porter (competitive advantage, industry analysis) and practitioners who bridge strategy with corporate finance in transactions.

Download brochure

Introduction brochure

What we do, case studies and profiles of some of our amazing team.

Download

Our latest podcasts on Spotify
Global Advisors | Quantified Strategy Consulting