Due diligence in outsourcing
Produced in partnership with Bristows

The following TMT practice note produced in partnership with Bristows provides comprehensive and up to date legal information covering:

  • Due diligence in outsourcing
  • Approaches to due diligence
  • Customer internal due diligence
  • Due diligence on the supplier
  • Supplier’s due diligence
  • Managing issues arising with the due diligence process
  • Competitive procurement—supplier reluctance to incur costs
  • Re-tender exercises—incumbent supplier’s reluctance to share information
  • Post-signature diligence

Due diligence in outsourcing

Due diligence is the name given to the process by which the factual and legal background to a transaction is collated and assessed. Whereas in M&A transactions due diligence typically only involves the purchaser carrying out due diligence on the acquisition target, in outsourcing due diligence should be a two-way process with the supplier assessing the customer’s proposed outsourcing project and the customer assessing the supplier’s ability to provide the services.

This Practice Note covers the following:

  1. Approaches to due diligence

  2. Customer internal due diligence

  3. Due diligence on the supplier

  4. Supplier’s due diligence

  5. Managing issues arising with the due diligence process

Due diligence is never going to be the most glamorous part of an outsourcing transaction but it is one of the key foundations on which the deal will be built. From a customer perspective, due diligence on its supplier is essential but equally its internal due diligence and engaging with its supplier to allow supplier due diligence on the function to be outsourced are also essential.

Where only limited due diligence is possible, customer and supplier alike should look to address the impact of this in their contract as a lack of information at the outset of the deal is likely to increase the possibility of issues arising during the term.

Approaches to due diligence

It is essential that customers plan for and properly organise

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