Consulting DD: What does it look like at a boutique firm?

I'll keep it short: I received an internship at ZS at their Evanston HQ, but I was told by a friend in the firm that I can (in some ways) shape where I'm staffed for projects by expressing my interest areas.

After some light research into the topic, I found the on and off nature of PE due diligence interesting. I'd love to explore it more once I'm there this summer, as Chicago/Evanston is where the majority of their PE work is focused (partially why I chose this office).

The only caveat here is a lot of what I read online had to do with DD in PE, not from the consulting side of things.

So, I was curious:

What does PE DD consulting look like at a high level (anatomy of a project, general milestones for deliverables, timeline)?

Also, if you have the info: 

1) Is there a difference in how DD is done at a boutique vs a larger or higher tier firm (ZS vs a Bain, for example)?

2) Any insight into ZS specifically when it comes to how they do PE DD projects?

Comments (6)

Most Helpful
Jan 9, 2022 - 6:57pm

The goal of a DD is to help the PE fund understand the market and the target's position in the market relative to competitors. The specific set of questions being answered can vary from project to project, e.g. who is buying this product, how competitive is the product, total addressable market, market share split, how much whitespace is there left, how much can we expect this market to grow in the near term, etc.

There are typically 3 workstreams: interviews with customers and competitors, customer survey, and market model. 

These projects are usually 2-4 weeks long on the buyside and a bit longer on the sellside.

I doubt that DDs are conducted all that differently between the firms, though Bain is notably the market leader in this space and they have a reputation for producing the highest quality of work

Jan 9, 2022 - 7:08pm

Much appreciated! Based on the timeline you highlighted, this firm's DD is for sure focused on the buyside. Do you work (or have you worked) in this space?

If so, I'd love to know: 

Are there opportunities for exits into PE (doesn't need to be a mega fund)?

If not, are there any opportunities for IB, corp dev, corp strat, or even VC?

Seems like building a skill set in that realm would be valuable across an array of industries/roles, but maybe it's more niche than I think.

Jan 9, 2022 - 9:21pm

Yup, Im at MBB and Ive done a moderate amount of DD work here

Yes, exits to PE out of MBB (less so the T2 shops, though still possible) are fairly common these days. There are a lot of resources on WSO and elsewhere on how to recruit as a consultant, it's a well-defined process

In terms of the other exits you mentioned - going to IB would be more of a lateral move as opposed to an exit, since you'd be restarting as an analyst. The two jobs are fairly different. Corp dev is possible, but IB would set you up better for that. Corp strat is the bread and butter of consulting exits so that's always going to be an option. VC is doable, but it's reliant on networking.

I wouldn't worry about whether the skillset is too niche, since ZS is a fairly reputable firm, and focus more on how you plan on selling your skillset

Jan 15, 2022 - 9:00pm

Thanks a lot for this insight. This actually really helped me understand how I should be thinking in terms of where the skills I'll pick up there can be translated elsewhere. I also will definitely be pursuing the resources you mentioned. I didn't realize moving from consulting to PE was so common that there was a playbook for it. Much appreciated!

Jan 15, 2022 - 9:09pm

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