QoE
Senior associate at an UMM PE fund getting more exposure to QoE's recently (early part of my associate tenure was really slow on the transaction front)
Curious if any of those in the buyout space would be able to share best practices / tips on how they go through these? More so interested in working norms / level of diligence rather than any focus on specific line items.
Few questions from my end as I've started to go through -
- From what I've seen, we'll typically get 1-2 hours with management + sellside providers to talk through the QoE. Often times, this doesn't end up being enough time to get enough voiceover for specific adjustments / addbacks. Do you typically find yourself asking for / receiving more time than what I outline above? Do you handle the rest through email / diligence trackers?
- My VP is typically going through literally every backup for any adjustment (including simple accounting things like normalization of workers comp or general liability). Is this common? If you notice an error / liberty taken with the sellside methodology, do you try to correct it on your own for a more appropriate adjustment or do you just flag as "subject to further diligence" and wait until you've hired a buyside QoE provider?
- How do you actually engage buyside providers? In my few reps so far, they've been super helpful in answering specific accounting questions / setting up diligence lists, however for IC, my firm typically has a page on QoE Adjustments where we typically show Sellside QoE and "Insert Fund Name" Perspective with a revised calc. Every once in a while, we'll include a column for PWC/KPMG/Deloitte perspective, but I've seen us shifting away from that. Is that in line with your experience?
- How in depth are you monitoring buyside provider's work? As an example, when they send a diligence list or diligence tracker, are you going through it in detail or are you just forwarding to the sellside banker? I've seen both approaches from midlevels at my firm and curious which is more appropriate. Obviously it helps to be on top of everything, but I struggle to understand how VPs / Principals can get everything done in the day + sleep if they're reviewing things like third-party request lists (in detail rather than just a quick skim). Not sure if I'm just slower than most
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