Article Summary
Operational Due Diligence Is Not a Checklist: How Investors Lose (or Unlock) Value After the Deal
Financial diligence explains the past. Operational diligence determines the future. This article explores why execution risk is the most underestimated driver of post-deal success or failure.
Operational Due Diligence Is Not a Checklist: How Investors Lose (or Unlock) Value After the Deal
In many African transactions, due diligence is treated as a compliance exercise. Financials are reviewed, legal risks are flagged, and deals move forward.
Then the surprises begin.
Margins disappoint. Systems fail to integrate. Key staff exit. Synergies remain theoretical.
In several post-acquisition environments we have supported over the years, the most damaging risks only became visible after closing – when operational reality replaced financial assumptions.
The issue is not weak financial diligence. It is weak operational diligence.
Why Financial Diligence Is Not Enough
Financial statements describe what happened. They rarely explain why it happened or whether performance is sustainable.
Across multiple transactions, operational fragility has been hidden behind manual workarounds, heroic individual effort, deferred maintenance, informal supplier relationships, and unrecorded execution risk.
Without deep operational insight, investors acquire risk without realizing it.
Common Operational Blind Spots
Supply Chain Fragility
Availability may look stable only because of excessive buffers or emergency purchasing. Across post-deal reviews, supply chain risk often surfaces as the earliest value destroyer.
Systems and Data Integrity
ERP systems exist, but data quality is poor and reporting unreliable.
Governance Gaps
Decision rights are unclear. Escalation paths are informal. Governance exists on paper but not in practice.
People and Capability Risk
Critical knowledge sits with a few individuals. When they exit, operational stability erodes rapidly.
What Strong Operational Due Diligence Looks Like
Effective operational diligence examines process stability, execution capability, governance effectiveness, integration readiness, and first-100-day risk.
It asks a simple question:
Can this organization sustain and improve performance under new ownership?
Unlocking Value After the Deal
Where investors engage early with operational leaders who have lived through multiple integrations, outcomes change. Integration stabilizes faster, credibility improves, and value capture accelerates.
These outcomes are rarely accidental. They are the product of experience gained across multiple deal cycles.
The Bottom Line
Investors do not lose value because deals are bad. They lose value because execution risk is underestimated.
These insights are shaped by years of exposure to post-deal environments where execution pressure is highest and tolerance for error is lowest.