What happens to all the valuable insights gained during diligence once a deal is closed?
Private equity fund managers pour vast sums into diligence – ranging from hundreds of thousands to several million dollars.
What happens to all the valuable insights gained during diligence once a deal is closed?
Private equity fund managers pour vast sums into diligence – ranging from hundreds of thousands to several million dollars.
All too often, DD reports – together with the insights in them – are filed-away in folders or buried in inboxes.
When new deals in similar spaces come knocking, some deal team members embark on the task to recover insights from previous transactions:
They consult colleagues who worked on a similar deal, to extract nuggets of wisdom
They read previous Investment Committee memos in search of risk summaries
They read through old diligence reports, trying to piece together the puzzle.
Even for the select few who are delighted to geek-out on these reports, the context is often lost. Risks are often unaccompanied by their mitigants and deciphering how a risk was addressed in transaction documents can be close to impossible.
This leads to a costly and time-consuming diligence process as deal teams often end up reinventing the wheel.
Imagine if, every time a deal team tackled a project in a specific jurisdiction or sector, an organization's collective wisdom automatically surfaced, with key risks distilled from thousands of pages of diligence reports and post-completion insights.
This could lead to higher-quality discussions with senior firm members, sharper hypotheses, and a more efficient diligence process.
Let's discuss - what are your thoughts on this?