Due diligence is required for the parties to seek validation on the proposed valuation of the M&A deal. There are bound to be instances where, after due diligence has been conducted, the parties would agree or compromise on revised valuation, depending on the results of their fact-finding mission.

Another reason why due diligence is important is that it will serve as an aid to management when it is time for the integration process to begin. Armed with the information and knowledge obtained through due diligence, the integration and transition can be facilitated and performed smoothly and seamlessly.

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It is also one way of preparing the combined business for its future operations. During due diligence, they will be informed of potential problems, issues or risks that they may face after the business combination. Having knowledge of these problems early on will aid them in coming up with preemptive actions and solutions.

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Ultimately, due diligence is conducted in order to minimize risks and maximize shareholder value in an M&A transaction.