Due Diligence Experience
Value of Experience in Private Equity Due Diligence
Carried Interest has a great post on the value of experience during due diligence. While private equity due diligence has made great strides in recent years, with the current package including much--if not all--of the following aspects:- Market and strategy analysis by a consulting firm to test and validate the commercial thesis behind the investment
- Financial and tax review by an accounting firm
- Legal review
- Insurance analysis
- Environmental risk assessment
- Management team background checks and capability review by an HR consultant.
McKinsey may do a great job of mapping out the market structure, analysing segment profitability, testing growth assumptions, and so on. But there's nothing like having a recently retired CEO by your side when you tour the factory, interview customers, or hold question and answer sessions with management.I think it's hard to understate the importance of returning to your basic due diligence in addition to all of today's due diligence, especially that which is outsourced to other specialized consulting firms. By bringing a person with years of experience in buyouts, you supplement your due diligence research with another perspective on the deal.
He'll be the person who notices that the overhead cranes in the workshop belong in a museum and need to be replaced immediately. Or warns you that a major supplier has been bought by the competition and will probably cut off distribution. Or remembers that this particular company always had a problem keeping good sales reps.
Tags: Private equity due diligence, private equity research, private equity experience, private equity firm due diligence, due diligence experience
Link to This Resource: Due Diligence Experience
http://privateequityblogger.com/2009/07/due-diligence-experience.html