Key points in PE Due diligence

Hi guys, 

I guess some of you already performed (analysed) due diligence while bidding for a target company, and I was wondering what were the key elements you were focusing on. Could you please share some best practices? 


Thanks a lot in advance !  

 

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Most Helpful

Due Diligence looks different for every industry and transaction type. You have to worry about making sure that your value-add plan can actually be enacted and not restrained by any limiting factors and verify that the assumptions you made in the underwriting process are realistic and can happen. Otherwise, you need to scale back the aggressiveness to what expert's think is real and see if the deal still pencils out. DD is more about reality checking the deal assumptions and combing through legal docs to make sure you aren't being screwed over when you take over as the operator. Best practices would be to just ask a legal team or operations team what pitfalls they might have while operating and get them the info they need to make sure that they can operate it to the levels that was presumed. Eventually you go through enough DD periods that you know the operating business model and what makes a good business and bad one, plus you'll see what kind of questions are asked of you throughout the process and know to ask them yourself upfront to be prepared. 

 

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