Operations Due Diligence: 10 Key Questions Private Equity Investors Need to Ask on Every Deal - TriVista (2024)

FAQs

What are good due diligence questions? ›

Operational due diligence is a type of due diligence that investigates the business model and operations of the target to ensure it's a good fit for the buyer. This could include review of: All operating processes. Supply chain, logistics and procurement efficiencies.

In due diligence, the PE deal team gathers information about the target company, its history, and its assets to prepare an appropriate purchase price and a business plan for the company.

The due diligence process helps the investor determine if its initial decision to provide funding is based on accurate information. As such, investors check your finances, your company's structure, legal documents, key personnel, employment contracts, vendors, clients and more.

The 4 P's of due diligence are People, Performance, Philosophy, and Process. These key elements form the foundation of a thorough due diligence process, covering aspects related to the team involved, performance metrics, investment philosophy, and the overall process followed.

Customer due diligence (CDD) is a process of checks to help identify your client and make sure they are who they say they are.

A due diligence checklist is a way to analyze a company that you are acquiring through a sale or merger. In the context of an M&A transaction, “due diligence” describes a thorough and methodical investigation and assessment.

Other examples of hard due diligence activities include: Reviewing and auditing financial statements. Scrutinizing projections for future performance. Analyzing the consumer market.

Below, we take a closer look at the three elements that comprise human rights due diligence – identify and assess, prevent and mitigate and account –, quoting from the Guiding Principles.

The three main private equity valuation methods are: discounted cash flow, comparable company analysis, and precedent transactions. To get an accurate, court-defensible valuation, we recommend you work with a third-party valuation firm.

How to do due diligence on a private company? ›

Due diligence is a relatively common term. Used in business, it broadly refers to the process of investigating and verifying information about a company or investment opportunity. Specifically for compliance teams, it comes up when you consider relationships with new vendors and third parties.

A due diligence questionnaire, referred to by the acronym DDQ, is a list of questions designed to evaluate aspects of an organization prior to a merger, acquisition, investment or partnership. Sometimes, the due diligence questionnaire is called the due diligence checklist.

This will include finances, sales figures, customer data, ownership of assets, personnel records, and customer data. Keep in mind that some proprietary information may be staged for later in the due diligence process when it's warranted by the seriousness of your intent.