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Due Diligence process: evaluating employees

Why would a CFO be interested in evaluating the employees and employee compensation plans during a due diligence process?"

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We should agree about the process called due diligence. "Due diligence is the process by which confidential legal and financial information is exchanged, reviewed and appraised by the parties to a merger or substantial asset transfer. The essence of the due diligence process is an effort to make everyone on the negotiations committee, and by extension everyone on each board, as aware as a prudent board member can be of any liabilities the other party may bring to the transaction." http://www.lapiana.org/resources/tips/negotiations/08_1999.html

The CFO, by definition, would be interested in the financial information. In many companies, ...

Solution Summary

The solution explains the due diligence process as commonly used in merger situations. For evaluation of employees, the solution gives 10 possible types of information a CFO would carefully investigate when reviewing employees and their compensation packages. For each of the 10, a reason for importance is given.