Why Deep Diligence?

by Pierre-Yves Jette

Background

For the better part of the last 20 years, I have been a buy-side investment advisor for a private equity fund located in Montreal, Canada. Having previously worked in product development and corporate strategic planning, I entered the industry with my own set of preconceived notions regarding the private equity investment process.

While I initially expected the due diligence process to essentially be a strategy-driven process accompanied by some financial analysis, legal and environmental considerations, I was surprised to find out that it wasn’t so. Many industry actors I met (selling business owners, financial intermediaries, consultants and many investment funds) actually treat due diligence as a set of accounting and operational “audits”, with industry and market outlook receiving a rather superficial, high-level lip service.

An Important Realization

After researching industry best practices, I’ve come to realize that the underutilization of business strategy tools and frameworks within the due diligence process is a wide-spread phenomenon in the private equity/M&A sphere.

The Good News

Fortunately, the situation is getting increased attention from industry participants, and many are now acknowledging “strategic due diligence” as a key component of successful investment.

My aim with these upcoming posts is to share knowledge, stories, resources, ideas and tools to enhance your buy-side strategic due diligence process.

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