Title

Hazards to Effective Due Diligence

Publication Type

Journal Article

Publication Date

1-2015

Abstract

It is not surprising that many business deals fail to realize their expected future value because some deal makers fail to perform effective due diligence. Successful deal makers, however, know that due diligence is one of the most important tasks in successful deal making. Thus, they avoid the psychological and contextual traps that cause poor due diligence. In this article, I describe the hazards – the psychological biases and contextual factors – that might affect the due diligence task. These hazards include information availability bias; confirmation bias; overconfidence bias; time pressure; self-interested agents; deal fever; narrow focus; and complexity. Following this review, I provide a number of suggestions to help deal makers and organizations overcome these hazards.

Keywords

Deal Making, Due Diligence, Decisions, Biases, Hazards, Negotiation

Discipline

Organizational Behavior and Theory

Research Areas

Organisational Behaviour and Human Resources

Publication

Eurasian Journal of Business and Management

Volume

3

Issue

1

First Page

1

Last Page

7

ISSN

2148-0206

Identifier

10.15604/ejbm.2015.03.01.001

Publisher

Eurasian Publications

Additional URL

http://dx.doi.org/10.15604/ejbm.2015.03.01.001

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