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?