Give Diligence its Due

The legal due diligence undertaken by a private equity buyer is largely the same procedurally and substantively as that of a strategic buyer, but there are some nuances worth noting. A financial buyer or sponsor may or may not already have portfolio companies operating in the target's industry, and therefore may not have the same depth of industry expertise as a strategic buyer. Each private equity fund has its own investment criteria; some funds have specific mandates and only invest within certain industries or market segments; other funds' portfolios span a variety of industries, and those buyers may not have prior investment experience within the target's industry. These broad mandate funds will want to engage advisors, including expert industry consultants, early in the process to commence business and legal due diligence to get up to speed on the target's industry and be in a position to make a decision as to whether to pursue a transaction. This practice note discusses the topics of review that counsel generally should consider in a due diligence investigation for a private equity M&A transaction.

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Related Content

• Sell-Side Due Diligence in Private Equity M&A Transactions
  Review these key considerations for conducting sell-side due diligence (i.e., legal due diligence from the perspective of counsel to the target company) in a private equity M&A transaction.
• Private Equity Transactions: Management Due Diligence Call Agenda
  See this explanation of the role of due diligence calls with an acquisition target's management team and how to prepare for such a call, including drafting an agenda.
• Due Diligence Questionnaire 2.0 and Diversity Metrics Template (ILPA Model Form)
  Consult this recently updated model DDQ that responds to most potential questions prospective investors may have about a proposed private fund investment and the fund's management team.

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