Does Your PE Firm Need an M & A Due Diligence Advisor?

3 Min Read

If you’re a private equity firm eyeing a new acquisition, you’ll want an M & A due diligence advisor (expert network advisor) in your corner. Going in blind, without understanding the potential risks, liabilities, or red flags, could have detrimental consequences in the future. This is why smart PE firms turn to sector experts for M&A due diligence assistance.

Let’s clarify what role an advisor serves in your PE firm and three benefits you’ll gain from working with an expert advisor during the due diligence process.

What is M & A Due Diligence?

Think of due diligence as a deep dive into the target company. This process involves investigating financial standings, legal documentation, business operations, suppliers, supply chains, loans, and investments before making an investment. 

M & A due diligence is an extensive review and audit of a business that takes place before a company or private equity firm agrees to a merger or acquisition of a target. This process is essential for the acquiring company to make the best, more informed decisions, identify potential risks, and ensure regulatory compliance.

The Role of Your Advisor

M&A advisors specialize in specific industries, which ensures your advisor is well-versed in the industry jargon of the business you plan to acquire. It’s helpful to think of M&A advisors as “river guides” or subject matter experts.” They help you dig deep into all aspects of the business, including comparing and analyzing them against market data. This is especially helpful if your firm does not have experience in the industry you want to dip your toes into. 

During a live deal, instead of going in unsure of what decision to make. These experts can help you create a better strategy, steer you in the right direction to expand your network within various industries, and help you negotiate better terms for your acquisition and merger deals.

Benefits of Working with a Due Diligence Advisor

M&A deals can be headline-grabbing events that can propel companies ahead at a faster rate than attainable through organic growth alone. However many deals don’t go as planned or can destroy shareholder value. That’s why having an advisor is critical for successfully navigating the perilous road to conviction—considering all angles of what can go right and what can go wrong.

Here are four benefits.

• Informed Decision-Making: Conducting investment due diligence means your advisor illuminates and inspects every aspect of the target company. Get up to speed quickly and develop a go or no-go decision with confidence. 

• Position Your Firm As a Preferred Buyer: The competition is fierce, and you want to be selected as the firm that makes the purchase on the target. An advisor can help enhance your firm’s attractiveness to targets and align your offer with the seller’s priorities. This can give you an edge in negotiations and make your firm the preferred choice for sellers.

• Accurate valuation of the target business: Your M&A consultant will evaluate your target business’s financial statements, assets, liabilities, and other finance-related reports. This is important so you can understand the risks you’re taking by agreeing to a merger or acquisition. Digging into the target company’s financials is also essential for valuation purposes. An M & A due diligence advisor can help determine whether the target company’s asking price is fair. Also, they help you feel more at ease with a higher price point if you fully understand the business, potential add-ons, and verticals.

• Quicker Decisions: An experienced advisor speeds up the M & A due diligence process by spotting important issues early and offering practical, expert advice. This can be the difference between missing valuable opportunities and quickly adapting to changing market conditions.

Partner with Apex Leaders

As a private equity firm, conducting due diligence before acquiring a new target is much easier with an M&A due diligence advisor. With an advisor on your side, you and your team will learn everything there is to know about the target company to make the best, most informed decision. Plus, they can help you expand your network so you can be sure you’re connected with the right people in the new-to-you industry.

What sets Apex Leaders apart from traditional expert networks? It’s our focus on forming a precise-fit partnership between our clients and our seasoned experts. 

As noted by Apex Leaders CEO Dave Myers, “Whether your deal is at an early stage or under LOI, we connect you with highly-vetted subject matter expers and River Guides. This ensures you get the right insights to accelerate your decision-making and get to conviction.”

Our team matches you with the highly-vetted private equity due diligence advisors. Let’s chat.