Mergers and acquisitions (M&A) have always required careful due diligence. But in today’s market, buyers are digging deeper than ever before. With heightened regulatory scrutiny, complex deal structures, and evolving risks around ESG, technology, and geopolitics, the traditional ‘tick-box’ approach is no longer sufficient.
UK dealmakers are seeing a clear shift: due diligence exercises are taking longer, covering more ground, and demanding greater collaboration between legal, financial, and technical advisers.
Daniel Tozer, Director and Head of Corporate at Whitehead Monckton, explains why, and looks at the implications.
Why the Shift?
Several factors are driving this trend:
- Market uncertainty. Economic volatility, fluctuating interest rates, and political change have made buyers more cautious. Rather than rushing to close, they are taking time to stress-test assumptions and probe risk areas.
- Less competitive auction pressure. With fewer ‘hot’ bidding wars, buyers have more breathing space to conduct thorough reviews.
- Regulatory and ESG focus. Environmental, social, and governance (ESG) issues are now central to deal evaluation. Investors want assurance that targets meet sustainability standards and won’t expose them to reputational or compliance risks.
- Technology and data risks. Cybersecurity, AI adoption, and data protection compliance are increasingly scrutinised, particularly where cross-border transactions are involved.
What Does Deeper Due Diligence Look Like?
The practical impact is clear:
- Longer timelines. Data room providers report record volumes of documents being uploaded, with buyers requesting more granular information than before.
- Expanded scope. Beyond financial and legal checks, due diligence now routinely covers ESG metrics, supply chain resilience, intellectual property, and cultural fit.
- Scenario testing. Buyers are modelling multiple outcomes—such as regulatory changes or shifts in consumer behaviour—to understand how resilient a target business really is.
- Specialist input. Law firms are working alongside sector experts, forensic accountants, and technology consultants to provide a 360-degree view of risk.
What This Means for Sellers
For sellers, the trend towards deeper due diligence has clear implications:
- Expect more questions. Buyers are now probing beyond the basics, looking closely at financial resilience, ESG credentials, and operational risks. Being prepared with clear, organised information will make the process smoother.
- Be ready for longer timelines. Deals are taking more time as advisers dig deeper. Building this into your planning helps avoid frustration and ensures you don’t feel rushed.
- Tailored reviews. Due diligence is no longer one-size-fits-all. Each transaction is assessed against its unique risks, whether that’s regulatory exposure, international assets, or technology reliance.
- Early risk identification. Issues that might once have been overlooked—such as data protection gaps or supply chain vulnerabilities—are now flagged early. Addressing them upfront can protect value and build trust with buyers.
- Clear communication. Sellers who can demonstrate transparency and readiness often enjoy smoother negotiations and stronger valuations.
ESG and Reputation: The New Frontiers
One of the most striking developments is the rise of ESG due diligence. Investors are increasingly unwilling to acquire businesses with poor sustainability credentials or opaque supply chains. This is not just about compliance—it’s about protecting reputation and aligning with stakeholder expectations. For law firms, this means integrating ESG assessments into the due diligence process and advising clients on remediation strategies where gaps are found.
Client Checklist: Preparing for Deeper Due Diligence
If you’re planning a sale or investment, here are five steps to help you stay ahead of the curve:
- Get your house in order. Make sure your corporate records, contracts, and compliance documents are up to date and easy to access. A well-organised data room builds confidence and speeds up the process.
- Audit your risks. Review areas that buyers are likely to probe—such as regulatory compliance, ESG credentials, data protection, and supply chain resilience. Addressing gaps early avoids last-minute surprises.
- Show financial resilience. Be ready to demonstrate how your business can withstand market shifts, interest rate changes, or geopolitical pressures. Clear forecasting and stress-testing add credibility.
- Highlight your strengths. Don’t just respond to requests—proactively showcase your business’s value drivers, from intellectual property to customer loyalty. This helps shape the narrative of the deal.
- Engage advisers early. Involving legal, tax, and sector specialists from the outset ensures you’re prepared for deeper scrutiny and can respond quickly to buyer queries.
For law firms, this presents both challenges and opportunities: the chance to showcase expertise, add real value, and help clients navigate a more complex deal environment.
The good news is that Whitehead Monckton’s Corporate lawyers are already accustomed to taking this enhanced approach.
Our team works closely with clients to anticipate risks, coordinate with specialist advisers, and deliver tailored due diligence that reflects today’s heightened expectations.
By combining legal insight and experience with commercial awareness, we ensure that transactions run smoothly and businesses are showcased to maximise value.
By embracing this trend and preparing clients for it, Whitehead Monckton continues to position itself as a trusted advisor with a knack for getting deals over the line.
If you’re considering a sale or investment, talk to our Corporate team and harness our experience and expertise to ensure the transaction runs smoothly.
