A conflict of interest is a situation where a person’s personal or professional interests may interfere with their ability to act in the best interest of the organization or the project1. A conflict of interest can compromise the integrity, objectivity, and impartiality of the person, and create ethical or legal issues for the organization or the project2. In the context of due diligence, a conflict of interest can affect the quality and reliability of the information and analysis, and jeopardize the success and confidentiality of the acquisition3.

The best course of action for a member of the due diligence team who realizes a close acquaintance is a high-ranking IT professional at a subsidiary of the company about to be acquired is to disclose potential conflicts of interest. This means that the team member should inform the due diligence leader and the organization’s management about the relationship with the acquaintance, and explain how it may affect their role or responsibility in the due diligence process. By disclosing potential conflicts of interest, the team member can:

Demonstrate honesty and transparency, and uphold the ethical standards and values of the organization and the project4.

Enable the due diligence leader and the organization’s management to assess the situation and decide the appropriate course of action, such as reassigning the team member, implementing additional controls or safeguards, or obtaining consent or approval from the relevant parties5.

Avoid or minimize the negative consequences or risks that may arise from the conflict of interest, such as legal liability, reputational damage, or loss of trust and credibility6.

References =

Conflict of Interest - CIO Wiki

What is a Conflict of Interest? Give Me Some Examples - The Balance Careers

How to Avoid Conflicts of Interest in M&A Transactions - DealRoom

How to Handle Conflicts of Interest - Harvard Business Review

Conflict of Interest Policy - ISACA

Managing Conflicts of Interest in the Public Sector Toolkit - OECD