Private equity/investment due diligence

Private equity investment offers a shot of capital and new strategic direction to take growth-oriented businesses to the next level. For their part, PE investors want to see a solid due diligence report that outlines the potential for sustainable, multi-channel growth and opportunities for cost reduction (i.e., evidence they’ll see a return on their investment with mitigated risk) as well as good governance and honest/accurate information from the business owner(s).

A PE firm will always want on overview of the business’ current state, areas of challenge and how these might be improved, future-facing business/technical requirements, and value-add opportunities. How much a company is leveraging trends and disruptive technology within its industry is a major criterion for investment, so its mission and vision need to align with the potential for innovation and transformation (e.g., AI and automation, changing consumer behaviour, new disruptive technology, regulation, etc.).

Accurately reflecting the existing business operations to confirm the investor/business’ understanding of where the organisation is now and what transformation/change (and hence investment) is required to meet the end-state objectives/ambitions.

Understanding the existing operating model, where the gaps lie and what needs to change to eliminate rework and inefficiency, and support growth plans around people, process, technology, and organisation. Establishing a fit-for-purpose operating model will positively influence the credibility of the business and strengthen its position in the acquisition and divestment marketplace, or for future IPO, MBO, or sale.

• A deep understanding of the business, its requirements, and internal/external provisions.
• Understanding the PE vision, objectives, and success criteria, including business case and intended benefits.
• Understanding of the business’ current state operating model and transparency of the future state.
• Requirements for management, oversight, and governance.
• Strategic mandate and engagement of business stakeholders for input.

• Reduce the administrative burden by delivering a best-in-class due diligence report.
• Undertake a current state operating model analysis.
• Identify/document any key target operating model (TOM) risks/issues, assumptions, constraints, and dependencies.
• Identify improvement opportunities and recommendations (re: futureproofing, M&A, and enabling technologies), with prioritisation.
• Baseline the As-is process hierarchy and design the To-be.
• Undertake a current IT estate review inc. core and non-core system requirements and contracts/licensing.
• Document the existing people dynamics.
• Assess and undertake a gap analysis of the current org structure.
• Prepare and articulate a full business case/benefits and strategy.