Private Equity Due Diligence

A private equity deal can’t be complete without a thorough due diligence procedure. It is essential to identifying the areas that generate value operational changes prior to investing in a business.

The process typically begins with a confidential memorandum (CIM) which is a document which includes financial data as well as a description of the management team, and commercial information, like details about the company’s clients and products. Then a smart private equity firm will add to the CIM with questions more specific to the business and use an electronic data room to collect documents and get answers from the target company’s management team.

Legal due diligence is a vital step, especially when it concerns buyouts. Most often, the business plan for a buyout involves cutting down on staff and selling assets, or closing facilities or offices – and all of these actions have the unintended consequence of generating legal issues.

As private equity investors strive to reach their internal rate of return (IRR) hurdle rates in this time of high purchase multiples good commercial and market due diligence is more essential than ever. A thorough due diligence process can assist private equity firms come up with a well-thought out day one growth strategy and unlock value more quickly than they would have believed possible.

To learn more about Baker Tilly’s ability to assist you by https://webdataplace.com/a-beginners-guide-to-private-equity-data-rooms-and-effective-deals/ ensuring due diligence, reach out to our team. We are here to help you with your next purchase. The image featured in the article is credited to Getty Images.