Failure to build and manage a team or take responsibility for results are most common ways in which executives can derail deals, according to management due diligence specialist Armstrong Craven, part of Work Group.

It also found that interpersonal rivalries between managers, a narrow functional background, and inability to adapt are also problems.

It says the quality of the management team being one of the most important considerations for investors, management due diligence is increasingly being used alongside financial due diligence by venture capitalists and corporate financiers in the run-up to a management buy out or acquisition.

Victoria Gartside of Armstrong Craven says: “Management is the biggest creator of value but also the biggest destroyer of it. Unanticipated problems are costly to rectify and can destroy the deal. Management due diligence is not simply a valuation process for the acquirer, but a foundation upon which action plans for improvement can be built.”