Top Tips for Impactful Investor Due Diligence

4 Min Read

For Ken Sipiora, a senior advisor with 39 years’ experience, the best calls with Apex Leaders’ private equity clients have been the ones in which clients know—and can articulate—their end game and any obstacles to getting there.

“What are your limitations, perceived roadblocks, internal org limitations to succeeding or working successfully in industry, and your tolerance for risk? Those are key questions,” Sipiora says, and ones that make a huge difference between a highly successful due diligence call and a dud.

Sipiora, a Perr and Knight senior advisor who’s racked up years of experience in the insurance industry, is one of a group of seasoned Apex Leader advisors we recently polled who’ve received exceptional scores from clients. From individuals who’ve consulted for years, to new advisors with years of leadership experience in their fields, these advisors weigh in on best practices for getting the most out of your investor due diligence calls. Read on to learn more about how to best gain access to these privileged insights.

Use Technology to Connect

Conversations with advisors work best when they’re in-person, according to our advisors, but for brief meetings, that’s usually not possible. Phone calls work well, but they also have their limitations. “If you have a tight, highly-defined scope you want to address, phone calls work,” says Sipiora. “But as you get bigger and broader, then the remote starts to break down; you need to be able to interact with the leaders and executives.”

Video calls are therefore a great way to personalize a meeting when you can’t be there in person. Services such as Zoom, GoToMeeting, and Skype are free and simple to use once you’re signed up. You can make calls even more efficient by making sure to email ahead of time any documents you’ll be reviewing with advisors.

“Sending documents even an hour before a meeting would make the call more efficient,” says Mike Beffel, managing member at Beffel & Beffel, who has more than 30 years’ of experience in manufacturing operations, inventory management, and process control, including roles as a president and executive director.

Keith Evans, a consultant who’s held roles as a chief investment officer and EVP, says that reviewing “scrubbed” information, or information that has been whittled down to its key components, makes it easier to have a more productive conversation. Google Drive and Dropbox are two easy to maneuver, and free, document-sharing services. Evans brings his more than 20 years of experience in IT, strategy, finance, operations and consulting to clients, with 12 years at the C-suite level.

If You’re Serious, Prepare

The top advisors want to be helpful and provide deep insights. Advisors say it’s easier to do their job when clients also do their homework ahead of time, preparing a list of specific and targeted questions they would like to discuss, and taking a few minutes before a call to think about what they hope to get out of the conversation.

“Being prepared is important,” says Beffel. He also recommends both advisors and investors take notes during calls so each person can flag issues they want to address later in the conversation, and as a reference for possible future calls.

Scott Cotherman, a consultant and former president and chief executive officer of Frank J. Corbett, Inc., says he’s better able to thoughtfully answer complicated questions if he can consider them ahead of time, so any information a client can send in advance is ideal. Cotherman consults for fast-moving, innovative companies in the life sciences and healthcare technology fields, and has held roles ranging from CEO, to COO to chairman. Other consultants agree, noting that it’s helpful to see a book on the deal itself ahead of a call.

Share Information About Yourself

Getting to know each other before diving into the details of why you’re seeking an advisor’s help is a crucial part of the client-advisor relationship.

The best relationships start off with solid introductions, with advisors introducing themselves and clients talking a bit about their background and their firm. This helps to make both parties more comfortable and gives advisors a better understanding of a firm’s investment theses and firm members’ experience in the space.

Cotherman says he often finds it helpful to read over bios of his client and any other key players at the firm, adding that the more insight he can get into a firm’s strategy, the better he’s able to generate more insightful questions and answers.

Communicate the End Goal

For many advisors, including Sipiora, this is key. Set aside time to think about your end game when prepping for an advisor call. Are you considering entering a market? If so, what do you hope to accomplish? Are you already in a market? What are you goals—to get to scale, to eliminate a competitor, to add to your platform?

The more you can tell an advisor ahead of time about your end game and your ultimate goals, the more fodder an advisor will have to help you accomplish those goals and the better they can advise you, says Sipiora.

Cotherman says his most productive conversations are those in which he knows a client’s strategic intent and has an idea of who their potential targets might be. Beffel says it’s easier for him to tie together seemingly disjointed parts of a market if he’s been given information about a client’s objectives and their framework.

Leverage the New Relationship

Advisors enjoy working with private equity clients on their goals and maintaining a good relationship. Relationships go both ways, so if you’ve benefitted from and enjoyed a conversation with an advisor, take the time to nurture that relationship.

You never know when an advisor might be helpful in the future. An advisor you’ve spoken to might also be connected to someone else in the industry who could be helpful to you down the road.