Operational due diligence (ODD) is the comprehensive investigation of a target company's operating model, processes, human resources, technology infrastructure, and supply chain conducted by the buyer or its advisors alongside financial and legal due diligence. While financial due diligence validates the numbers, ODD validates the business: it assesses whether the target's historical financial performance is sustainable, operationally grounded, and replicable under new ownership — and identifies operational risks not visible in the financial statements alone.

The scope of operational due diligence typically covers: organization and production processes (efficiency, scalability, bottlenecks and single points of failure); key personnel quality and retention (org chart, key-man dependencies, turnover, compensation); information systems and technology infrastructure; supply chain resilience and supplier relationships; customer service quality and contract terms (concentration, duration, renewal rates); and non-financial intellectual property (know-how, trade secrets, proprietary processes). In services companies, ODD focuses heavily on the people dimension; in manufacturing, on the plant, equipment, and maintenance capex cycle.

In acquisitions of Franco-Swiss SMEs and family businesses, ODD frequently identifies critical founder-dependency risk (key-man risk) — the business's performance being substantially dependent on a single individual (the selling founder) whose departure post-closing could materially impair revenues. This risk must be addressed through earn-out structures, management retention provisions, knowledge transfer programs, and carefully designed closing conditions in the SPA.

At Hectelion, we coordinate operational due diligence with our financial analysis to provide an integrated view of risks and value creation opportunities in Franco-Swiss acquisitions.