Operational Due Diligence Provides Private Equity Investors with Insight and Guidance

By conducting what we call operational diligence pre-acquisition, buyout managers can identify the opportunities and actions to accelerate improvements in EBITDA and free up working capital. Operational diligence focuses on value chain performance opportunities and the company’s potential to realise those gains.

In our approach, operational due diligence includes:

• As assessment of the company’s operating activities versus best-in-class practices
• An evaluation of the company’s leadership and organisation
• analysis of the firm’s cost structure against industry or like-industry benchmarks
• Identification of the improvement opportunities in EBITDA and working capital including a go-forward plan with timing and resources needed.

This in-depth article includes an overview of the four phases of our standard assessment and case examples that illustrate why operational diligence should be conducted after a letter of intent (LOI) is signed

To learn more, download the management briefing.