The possible use of balanced scorecard in the due diligence process for M&A transactions

This paper focuses on the Due Diligence phase and on instruments of performance management and in particular, on the role that the Balance Scorecard (BSC) could have in this phase. This tool has become increasingly important not only in terms of performance measurement but also as a mean to support the strategic management and alignment of companies. Through the BSC it is possible to define the mission and vision of a business, its short-term operational objectives and long-term strategic ones. Indeed, the BSC makes the business evaluation coherent through the assessment of performance management indicators which are linked to specific objectives, measures and initiatives. What is more, one of the key features of the BSC which makes it a powerful tool is the opportunity to interrelate prospects and objectives, generating improvements on various fronts. In fact, if from a theoretical point of view emerges, with the analysis of the literature, the possibility to use this tool in the above manner, it is necessary to check the feasibility from a practical point of view. To this end, we have developed a questionnaire that has been sent to 83 Italian managers with 3+ years of experience in the Corporate Finance, Strategic Consulting and Management Consulting areas. With the questionnaire we will try to give an answer to the research question, trying to find out evidence from the responses of managers who approach M&A transactions regularly. We believe that the testimonials of their of work experience can be a solid base to derive some interesting conclusions about the possible application of the Balanced Scorecard for the management of extraordinary operations. In conclusion, the current study can be considered a starting point to investigates more deeply companies involved in M&A deals. Moreover this study focuses exclusively on balanced scorecard. It would be also appropriate to apply this approach to other performance management tools to understand the relationship between performance management tools and M&A transictions. Future research might use alternative tools to validate our results.