Phased Approach to Direct Investment Due Diligence PPT

This PPT slide, part of the 63-slide Commercial Due Diligence (CDD) PowerPoint presentation, outlines the second phase of the Direct Investment Value Chain, focusing on the Due Diligence process, which is segmented into 4 key stages: Initial Screening, First Round Bid, Shortlist, and Exclusivity. Each stage is crucial for assessing potential investments and ensuring informed decision-making.

In the Initial Screening phase, the emphasis is on gathering preliminary insights. This involves personal networks and direct approaches to sellers. The analysis is limited due to restricted data access, necessitating external consultations with industry experts to validate assumptions and gather insights.

Moving to the First Round Bid, this stage spans 4 weeks and is characterized by a more structured approach. Here, the process includes obtaining an information memorandum and conducting periodic meetings with management. Informal advice from multiple consulting firms is often sought, along with discussions involving at least 2 financing banks to evaluate debt potential. The goal is to formulate and submit an indicative bid, contingent upon further due diligence.

The Shortlist phase, lasting 6 weeks, involves formal due diligence based on access to a data room and management interactions. This stage focuses on financial structuring and negotiations regarding management contracts. It is critical to mark up provided purchase agreements and ensure that bids are placed with a clear understanding of the due diligence requirements.

Finally, the Exclusivity phase includes finalizing legal agreements with the seller and conducting confirmatory due diligence. This stage often involves discussions on key terms of remuneration packages and planning for the first 100 days post-acquisition. Executing identified improvement opportunities becomes a priority, ensuring that the investment aligns with strategic objectives. This structured approach to due diligence is essential for mitigating risks and maximizing investment potential.

This slide is part of the Commercial Due Diligence (CDD) PowerPoint presentation.

This presentation is created by former McKinsey, BCG, Deloitte, EY, and Capgemini consultants. It explains the approach to Commercial Due Diligence utilized by global strategy consulting firms.

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Due Diligence Value Chain

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