Sending over a 50-question DD list, getting through 5 questions in 45 minutes because your VP won't shut the fuck up, rescheduling another 2-hour session for questions that we could honestly answer ourselves with reading and logic but have to cover our ass and "confirm."
95%+ of all questions I'm generating are purely to cover our/my ass, 3% are the ones my VP "wanted to confirm," and the remaining 2% are the ones I actually care about, but we don't spend nearly enough time on these despite me pushing hard to prioritize.
All in all, frustrating to spend so much time on minute details that won't impact the ultimate investment decision, and a shocking lack of adherence to 80/20. I don't find it particularly difficult to scour the earth, but I really just don't give a fuck.
To what extent is this better in growth or family offices?
The idea that you can condense the knowledge development process into a few weeks in order to build expertise on niche topics, particularly when that process is tactically led by sycophantic VPs, has forever alienated me from PE. Seeing how quickly things change post-acquisition reminds you that your so called expertise only extends deep enough so as to convince your investment committee to approve your deals.
OP, my friend in venture gets data rooms with 4 items in there. I’m certain it’s a continuum from there to here. Pick your poison.
It can be worse man. The last two deals I worked on have had DD lists of 600 and 850 items.
50, 600, 1000, any number of those you KNOW 99% of them are getting filed away on the drive never to be looked at again. I get the necessity of it, but like it's so boring
A big part of the problem is that you don’t know what you don’t know, so you end up asking seemingly silly questions and 99.9% of the time the answer is something mundane or unimportant. However, 0.1% of the time you uncover something super important… such as “sales dipped 10% from customer #25 three years ago because we actually had a product recall when a customer died using our product.” This is obviously extreme but I’ve had similar things uncovered in diligence through what are very routine, seemingly pointless questions.
All of that said, I agree that due diligence is a super cumbersome process and half the questions you ask have no bearing whatsoever on the outcome of the investment. For many topics, such as IT due diligence, it is more of a check-the-box exercise than anything else (and I like IT).
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