A private equity deal could not be complete without an extensive due diligence process. It’s the key to identifying potential areas of profitable operational changes prior to investing in a business.
This process usually begins with the creation of a confidential memorandum (CIM), a document which includes financial data as well as a description of the management team, and commercial details, such as details about the company’s products and customers. Then a smart private equity firm will supplement the CIM with questions that are more specific to the business. They will also use an electronic data room to collect documents and provide answers to view it now the target company’s management team.
Legal due diligence is yet another important step in the process especially when it comes to a buyout. The business plan for a buyout often involves cutting staff, selling assets, or closing facilities or offices – all of which can unintentionally generate legal issues.
In an era of high multiples of purchase, it is more crucial than ever before to complete a thorough commercial and market due-diligence. A thorough due diligence process can assist private equity firms develop a well-thought-out day one growth strategy and unlock value faster than they ever believed possible.
To find out more about Baker Tilly’s services to assist you with due diligence, contact our team. We are here to help you with your next transaction. Image credit: Credit to Getty Images.
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