How do you approach Due Diligence?
How do you guys formulate questions to ask managers of potential companies when you're visiting their offices/factories? Starting to get more investing responsibility and this is something I don't have the best experience in.
I believe McKinsey and Deloitte have written reports on the subject. I won't link them here because I think they are copyright protected, but you should have an easy time Googling them.
Good question, though. Portfolio company reviews and monitoring is almost a full time job at MFs.
Managing Due Diligence Process (Originally Posted: 11/09/2015)
I'm working on a sell-side M&A process thats in the due diligence phase. I've received several due diligence question lists from various parties hired by the acquirer to conduct different aspects of the DD (i.e. legal, financial, commercial, etc.). All the lists are in different formats and file types (excel and word).
How do you guys like to manage these lists?
Do you create one central spread sheet in excel so you can track the progress of each DD workstream?
Do you work directly in the file provided by the DD advisor, answering questions and sending it back every so often as documents get uploaded to the dataroom and questions are answered?
Thanks.
Definitely put it into one central spreadsheet in your own format. This way you can disseminate internally to the rightful owners to answer/provide info to the questions.
After you receive responses, send it back in their format. Just be careful not to include other buyers' questions/responses.
How to lead a due diligence process? (Originally Posted: 08/31/2015)
Where do you start, how do you divide the work, how many people do you have on your team, what software do you use, what documents do you prepare for the Investment Committee, how long does the process take, are you on-site or remote, do you talk to front-line employees or interview any executives, do you do channel checks, and what are common problems you encounter? To be on the same page, let's talk about this in the context of a technology or a CPG company between $50MM to $500MM in revenue.
is this a poem
I'm really looking for answers. Tag this "serious."
Great post. May be someone looking for this to discuss on this topic. Thanks for sharing this.
What is the DD for? The thoroughness and coverage of a DD exercise will vary significantly based on the purpose and associated liability regime.
Let's talk about due diligence for a PE acquisition — something a PE firm would commission from a management consulting firm.
Process for DD (Originally Posted: 01/05/2018)
Anyone have a concrete process to evaluate DD? I mean like do you check leases, rent roll, environmental, etc., in any specific order?
Ideally, at least in my opinion, I like to check income docs first (leases, licenses, parking agreements, etc.), then you'd do expenses (utility bills, tax bills, operating statements, etc.), then the CAM rec to tie them together/final verification. Obviously will depend on the quality/thoroughness of info you get and what type of property/deal it is. I don't get them often, but when I do get lucky enough to get previous environmental reports, survey, PCA, seismic, etc. I try to check those before anything else so everyone is aware of any issues as early as possible before the clock expires on DD.
Thank you, we are a re-developer for office in SoCal so leases are obviously really important, I am kind of new to this side of the business so I want to make sure I have some sort of process in order once we get a deal we go to contract on.
Existing building or development site? Process would differ slightly
It's both but we can just do existing right now.
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