CDD Plan of Attack: Risk of Overstatement of Digital Disruption Signals (and Opportunity)
The risk of ‘digital disruption’ is pertinent to almost every industry today. Naturally, acquirers look for signals that a target company will be able to brace the oncoming winds of change and enhance its products and services to meet the demands of an increasingly connected and digital world.
Value Gen Stimulant in Commercial Diligence Processes
Today’s GRAPH Papers® article is short and simple. A quick process, best-practice on the value gen. front of commercial diligence that could prove to be a useful commitment to make for your projects. Most diligence assignments start with discussion, and some amount of the diligence agenda, focused on testing the commercial value generation ideas that exist. And among investment teams, we know…
Assessing the Impact of Cyclicality in an Investment – a Voice-of-Customer Informed Diligence Approach
How a company will perform in weaker economic conditions is top of mind for investors when considering a potential acquisition. The starting point for that analysis is usually an examination of how the business fared during the last downturn. Studying prior financial performance – in terms of revenue, pricing and margins – is a critical first step. How steep was the decline? How fast was the…
A Practical Commercial Diligence Approach to Assess the Risk of Artificial Intelligence (AI) Disruption
The impact of constantly expanding applications of AI technology (Note 1) has many investors nervous about traditional human-labor-based businesses – from professional and technical services to administrative clerks. The sustainability of these businesses is a deep and challenging topic to assess. However, it is made harder by the convoluted analytics that many consultants have proposed to…
Timing the Meeting (the Commercial Due Diligence Partner Meeting with Management)
It is well established practice to bring your commercial due diligence partner to the Management Meeting. It creates context and gives your diligence practitioner a first-hand view of what management represents to be most significant.
Competitor Forecasting in Commercial Due Diligence: How to Chase Down a Moving Target
In a typical commercial diligence process, a significant amount of work is conducted to understand how the end-market and channels will grow and develop - ‘market forecasting.’
Avoiding Asymmetric Competitors in Technology Investing
In a recent conversation with a leading technology-focused sponsor, I was asked an interesting question: if [insert hyperscale technology company name] is getting into everything, then how do I know what’s safe? In this case, we were talking about Amazon, but the same could have applied to Microsoft, Google, Apple, Salesforce, Adobe, and more.
Maximizing the Potential of Industrial Tech
Judging by my recent conversations with clients, industrial tech continues to be an area of significant interest for private equity investors.
Observations on How Financial (PE) and Strategic (Corp Dev) Investors Consider Segmentation Opportunities Differently from One Another
Serving a wide-range of clients, one pattern that I have noticed is the degree to which the strongest Corp Dev groups (the “Strategics”) consider customer segments as a means for asset value creation – and do so in ways that outrun what many Private Equity firms consider.
Building Habits to Reduce Due Diligence Mistakes
Private Equity investing has been described as a combination of art and science, calling on a wide range of disciplines to make good judgements. In that spirit, I wanted to share a few thoughts I use to test my own judgment. They all surround a central question: What am I missing?