Private equity fund managers pour vast sums into diligence – ranging from hundreds of thousands to several million dollars.
What happens to all the valuable insights gained during diligence once a deal is closed?
Private equity fund managers pour vast sums into diligence – ranging from hundreds of thousands to several million dollars.
All too often, DD reports – together with the insights in them – are filed-away in folders or buried in inboxes.
When new deals in similar spaces come knocking, some deal team members embark on the task to recover insights from previous transactions:
- They consult colleagues who worked on a similar deal, to extract nuggets of wisdom
- They read previous Investment Committee memos in search of risk summaries
- They read through old diligence reports, trying to piece together the puzzle.
Even for the select few who are delighted to geek-out on these reports, the context is often lost. Risks are often unaccompanied by their mitigants and deciphering how a risk was addressed in transaction documents can be close to impossible.
This leads to a costly and time-consuming diligence process as deal teams often end up reinventing the wheel.
Imagine if, every time a deal team tackled a project in a specific jurisdiction or sector, an organization's collective wisdom automatically surfaced, with key risks distilled from thousands of pages of diligence reports and post-completion insights.
This could lead to higher-quality discussions with senior firm members, sharper hypotheses, and a more efficient diligence process.
Let's discuss - what are your thoughts on this?
