Applying a fuzzy multiple criteria decision-making approach to the M&A due diligence

摘要

A broad M&A due diligence process encompasses three phases: searching for the potential candidates, evaluating the candidates, and assisting the after-transaction integration. An FMCDM approach, which is the combination of Fuzzy Set theory and multiple criteria decision-making approach (MCDM), is applied to the second-phase evaluation as a mechanism of information discovery and synthesis. The Fuzzy Set catches the qualitative information and human judgment in addition to quantitative information, and MCDM is good for integrating a vast amount of information. Through Fuzzy Arithmetic, all input information is synthesized to be the output results for deciders’ references. In this work we develop the working steps of an FMCDM approach, including setting up the evaluation hierarchy, designing the set of linguistic terms and the set of corresponding fuzzy numbers for rating and weighting, proposing the formula for data standardization, and deriving the algorithms of synthesis. Finally, a detailed example illustrates the use of the proposed approach.