Due Diligence Workstreams - Outsourcing
Interested to learn how other firms run their diligence workstreams. How much of the FDD / CDD work are outsourced to the advisors vs done by the associates in your teams?
I’m trying to get a sense how deeply involved others are in the diligence process vs taking a more hands off approach letting the advisors do the work and reporting back to the PE client their findings.
Personally trying to find the right balance, thanks!
Based on the most helpful WSO content, the approach to due diligence workstreams and the balance between outsourcing and in-house work can vary significantly across firms. Here's a breakdown of how due diligence is typically handled, as per the insights from the WSO forums:
Outsourcing to Advisors:
In-House Work by Associates:
Finding the Right Balance:
In your case, to find the right balance, consider the following: - The complexity and size of the deal. - The in-house expertise and bandwidth of your team. - The criticality of each due diligence area to the overall success of the deal. - The cost versus benefit of outsourcing versus doing the work in-house.
Remember, the goal is to have a thorough understanding of the potential investment while managing the process efficiently. It's a strategic decision that should align with your firm's approach to risk management and value creation.
Sources: Advice for New Analysts Seeking PE Exits, https://www.wallstreetoasis.com/forum/investment-banking/breaking-into-private-equity-from-banking?customgpt=1, https://www.wallstreetoasis.com/forum/private-equity/then-and-now-compbanker?customgpt=1, Q&A: 2nd Year Associate at a MM Private Equity Fund, Q&A: Former Strategy& associate
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