January 9, 2025 • 36 mins
In this episode of the Private Equity Experience podcast, Ed and Rory dive into due diligence, a crucial step in buying or selling a business. They explain what due diligence is, how it works, and why it's essential for determining a company's valuation. The hosts also discuss the importance of working with experienced professionals, such as investment banks and financial advisors, to navigate the due diligence process and ensure a successful transaction. Learn the importance of due diligence in buying or selling a business and how to navigate the process with experienced professionals. Get tips and resources for finding reputable investment banks and financial advisors.
Show Notes:
- What is due diligence, and how does it fit into buying or selling a business?
- The importance of due diligence in determining a company's valuation
- How to conduct due diligence on potential partners or buyers
- The role of investment banks and financial advisors in the due diligence process
- Tips for working with experienced professionals to navigate the due diligence process
- Resources for finding reputable investment banks and financial advisors
01:14 Understanding the Due Diligence Process
07:14 Costs and Challenges of Due Diligence
09:08 Green Flags and Red Flags
22:34 Common Pitfalls and How to Avoid Them
28:02 Preparing for Due Diligence
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
emily-sander_1_12-10-2024_16 (00:34):
Ed Rory, dilly, dilly, due
diligence,
ed-barton_1_12-10-2024_1 (00:37):
dilly.
emily-sander_1_12-10-202 (00:38):
dilly, dilly,
ed-barton_1_12-10-2024_1 (00:39):
dilly.
emily-sander_1_12-10-2024_1 (00:41):
due diligence.
What is this and where does itfit into the process?
squadcaster-adea_1_12-10-202 (00:48):
in business or in life.
Cause it could be applicable inso many
emily-sander_1_12-10-2024_1 (00:51):
How do you conduct due diligence on
potential partners?
No, we're talking aboutbusiness.
Let's do, well, I guess thatcould be used for both business
and personal.
It's all the same.
Do you create spreadsheets andvirtual data rooms for your
potential?
ed-barton_1_12-10-2024_16 (01:08):
Dilly dilly.
emily-sander_1_12-10-2024_1 (01:09):
You probably do actually
ed-barton_1_12-10-2024_16 (01:10):
Dilly
emily-sander_1_12-10-2024_ (01:11):
you, you, you think in spreadsheets.
Um, no.
So we're talking about duediligence.
When someone is looking to buyyour company, they are going to
conduct due diligence as wouldmake sense.
If you are going to investmillions and millions of dollars
in a company, you want to knowwhat's going on.
What's up?
And so due diligence is theofficial process and way of
(01:34):
figuring out what's up with thiscompany.
squadcaster-adea_1_12-10-20 (01:38):
the heart of it.
Um, due diligence is really, itis a deep investigation into the
information supporting adecision, a transaction.
you know, uh, you know, uh, uh,an action that you're looking to
take.
So at the heart of it, you'rejust doing investigative work on
(02:01):
a potential outcome you'retrying to consider basically.
emily-sander_1_12-10-2024_ (02:05):
Are, are P.
E.?
ed-barton_1_12-10-2024_1602 (02:06):
due diligence, was going to say the
due diligence process is thedriver for your valuation, all
things being equal.
you know, you've got a businessand what that process does is
basically you've said, mybusiness does all these
wonderful things and it's gotthese capabilities and.
You know, we're the best, youknow, shoe manufacturer in the
(02:27):
United States and you need tobuy us.
And due diligence is really theconfirmation of all the things
you're claiming.
And so it's, it's a very, it canbe a very, very, very deep dive.
squadcaster-adea_1_12-10-20 (02:42):
And I mean, it covers various things
under the umbrella of duediligence.
I mean, you have financial duediligence, you have legal due
diligence, you have operationaldue diligence, you have due
diligence, I mean, everythingthat goes into.
A business that comes underscrutiny during a time of, let's
say or M& A or, or, or sort of atransaction that's all wrapped
(03:05):
up in this concept of duediligence, you're really, you
know, deep diving on thebusiness entirely, as Ed said,
um, in, you know, oftentimes avery compressed amount of time.
So it becomes a very criticaland oftentimes stressful part of
that deal framework.
emily-sander_1_12-10-2024_ (03:23):
Yes, and so are they, would you say
they're trying to find thingsquote unquote wrong with it, or
they're trying, I mean, we usethe analogy of like buying a
house, and so when someone goesin for inspection, they're
They're looking for things tolike, let me pay less.
Are they looking for that?
Are they looking for noconfirmatory evidence that we
want to buy this thing or justtell us what's going on under
(03:45):
the hood so we can makeadjustments and then decide to
move forward and have a planfrom there.
ed-barton_1_12-10-2024_1602 (03:51):
All of the above?
Truly, it is truly all theabove.
Really, really, I've generallysaid you've got a couple of
phases of due diligence.
there's a, there's a, there'sgoing to be first phase or
preliminary due diligence wherethey're really trying to get a
feel for the business, theoperations, the, how you do
(04:12):
things, the, management team,they're not digging deep, but
they, they're digging broad andgoing, okay, do we really feel
like we've got a goodunderstanding of this?
and that's normally done ifyou're, if you're in a
transaction, that's normallydone, um, kind of after the
first set of meetings.
There's the lobe and parts ofthe data room and kind of let,
(04:34):
let the potential buyers go inbefore they submit their letter
of intent or indication ofinterest.
then there's, once you kind ofget through that, on their side,
on the private equity purchasersside, they've come up with that
thesis, investment thesis.
This is what we think theinvestment can do.
This is what we expect to beable to get for efficiencies.
(04:54):
This is what we can do from acapital perspective for, you
know, balance sheet engineering.
And then.
You go to the next phase ofdiligence, which is confirmatory
diligence, which is a going now,we want to confirm all the
assumptions that we've put inthere and we want to make sure
that there's no surprises.
Now, everybody knows there'salways going to be surprises,
but the fewer surprises, thebetter.
(05:15):
And the more you can cooperateand disclose, you know, we talk
about finance theory in, in, inthis pod.
So the, the you can disclose,the lower the risk premium,
which means a higher.
The higher the value of thebusiness.
So I, so that, but that thosetwo phases of diligence are
important because they'relooking at very different
(05:37):
things.
One is coming up with a thesis,understanding the business
before they put an indication ofinterest or LOI in.
And then the second is really toconfirm all those assumptions
and try and make sure thatthere's no surprises.
emily-sander_1_12-10-2024 (05:49):
Yeah.
So the first one is kind of likea surface level.
Like, let me just sniff aroundand get, get a lay of the land.
And then the second one, I'veheard someone on this podcast
described as like a anal probewhere it's like, okay, we're
doing a full look at the insideof this business.
Yes.
ed-barton_1_12-10-2024_16 (06:06):
exam.
The, the, the, the other pieceis for founders and management
teams to recognize is diligencestarts at the time you sign up
the investment banker.
So the investment banker isgoing to do diligence on you to
make sure you're ready.
A lot of times they're on acontingency fee, so they don't
want to burn cycles, um, withoutfeeling like you've got a
(06:28):
transactable business.
And then after that, when you'vegot prospective buyers,
diligence starts with theirfirst teaser and your first
conversation.
They're going, okay, is thissomebody who I can partner with?
How does he make, how do theymake me feel?
Are they smart?
Me?
Do I feel like this is, youknow, they're trying to hide
something.
So diligence starts atpreliminary diligence or, or
(06:50):
kind of initial diligence phasestarts the minute you decide to
start putting your business onthe, on the market.
And doesn't end until after thedeal closes.
squadcaster-adea_1_12-10- (07:01):
Every piece of information that is
shared between parties issubject to scrutiny, um, you
know, challenge, um, validationand, and that's what comprises
due diligence.
And what I would say as well is,you know, Due diligence is a
very costly process for allinvolved and we can get into You
know the the throws of it, butbasically, you know I've been
(07:24):
part of deals where I know for afact that the other side the
potential acquiring party isspending millions of dollars to
Validate this as a potentialtransaction.
So while I agree with ed's broadstatement that they're looking
for, you know Validation eitherway i'd say most parties get to
(07:45):
this phase of deep diligenceWith the intent that they can
move forward with the dealthere.
They're, you know, they don'twant to spend millions of
dollars for nothing.
There's something in the gameskin wise for all parties at a
certain point, but upfront,yeah, I think, that's why the
due diligence process is done.
As I'd said, in a phased manner,typically.
(08:05):
What I've observed is that, youknow, the customer due
diligence, the market duediligence, the, the, the, the
things that underpin thebusiness, your business model is
kind of what's pushed up frontso that that can be validated
first, followed by financial duediligence.
And then lastly, which gets tobe kind of the most expensive
piece of it is the legal duediligence.
(08:27):
All of the stuff involved withthat, um, you know, regulatory
due diligence, compliance duediligence, that's stuff that
need to validate, but if youcan't get past the business
diligence, um, and the financialdiligence, you're, there's no
point in spending the money andenergy on all the other
supplementary pieces of that.
Very
emily-sander_1_12-10-2024 (08:45):
Okay.
So this process.
The later stages of it are verythorough.
I'm going to use that word, butthis is also critical to
determining the valuation.
So if you're a founder, you wantto pay attention and be ready
for this, which is part of whyyou listen to this podcast.
So we can kind of tell youwhat's coming your way,
squadcaster-adea_1_12-10-2 (09:02):
hmm.
emily-sander_1_12-10-2024_1 (09:02):
but how, how does this process work?
Like who on the PE team are yougoing to be dealing with?
What are green flags?
What are red flags?
Just how does this process work?
If you're like a first timefounder going through due
diligence.
squadcaster-adea_1_12-10- (09:16):
yeah, exactly right.
And I think you kind of touchedon it there.
Green flags, red flags.
I think, you know, red flags arethe things that people really,
uh, you know, kind of expect tofind in some ways.
Just every business has its ownlittle, little skeletons in the
closet.
It seems, you know, things likethat.
But the point is to get yourarms around that doesn't mean
(09:36):
just because those exist, thatthere's not a deal to be done.
emily-sander_1_12-10-202 (09:39):
Right.
squadcaster-adea_1_12-10-2 (09:40):
them and you understand the
implications, Yeah, yeah.
usually get past these things,but it's those green flags that
are interesting.
I mean, I was just having aseparate conversation with Ed
about a deal he was involvedwith where, you know, I know Ed
was doing deep diligence andfound some opportunities and
then closed the deal.
And it turns out thoseopportunities are green flags
and there's going to be a betterdeal, uh, than what he paid for
(10:01):
prospectively, you know, sothose are things that can
happen, that's only a result ofthe thorough work being done on
the buying party.
And then the heavy work doing onthe party that's selling and
getting the information puttogether in a way that can be
digested and relied upon andultimately trusted at the end of
the day.
ed-barton_1_12-10-2024_1602 (10:19):
the one thing to keep in mind, I
think if you're a foundingmanagement team and you haven't
been through this before, is beprepared to be overwhelmed.
the reason I say that is whenthe diligence starts, you're
going to have, it's going to bea couple of private equity
folks, you'll have an associate,a principal, or a VP level, a
director, a managing director.
(10:40):
So it'll be three or four folksthat will be playing from the
private equity side.
Once you move to theconfirmatory.
As Rory noted, you know, thelast deal where I was on sell
side, the buyer probably spent22 to 25 percent of the purchase
price on diligence.
squadcaster-adea_1_12-10- (10:57):
Yeah.
ed-barton_1_12-10-2024_16024 (10:58):
so it was a 20 million deal.
They may have spent 5 million ondiligence.
So it was, it was a ridiculous,uh, it was ridiculous for my
seat as a seller, ridiculousdiligence.
squadcaster-adea_1_12-10- (11:08):
Yeah.
ed-barton_1_12-10-2024_1602 (11:08):
but you had, you had not only did
you have the private equityfolks, You had their operating
partners were involved in theirvarious areas.
So you had folks basically whowere kind of the acquiring
company, CFO, the acquiringcompany.
So it was private equity backed.
A merger with one of their otherportfolio companies, so you have
their operating partners in.
(11:30):
They had IT consultants come into look at the systems and
determine what technical debtneeded to be retired or what we
should do with our stack.
They had accounting folks comein, including forensic type
accountants to be able to goback through our, all of our,
um, transactions over the lastcouple of years and determine
because we had non operatinglosses whether it was, you know,
(11:51):
more beneficial to, to acquirethe operating entity.
Um, or to acquire the assets.
They had, um, legal duediligence, include two different
law firms, one for intellectualproperty and another one for
transaction.
Um, so it was, and, and it wasjust, you know, there was just
like four of us on themanagement side trying to juggle
all that stuff.
squadcaster-adea_1_12-10- (12:10):
Yeah,
ed-barton_1_12-10-2024_1602 (12:11):
and you had another consulting firm
coming in to validate the marketanalysis, um, that we had
provided for a couple of ourproducts.
So it was, it was, oh, it wasoverwhelming as on the sell side
and just be prepared to All of asudden have an army of
consultants, accountants,lawyers, scientists and
everybody else descend upon youand be requesting tons of
(12:32):
information.
And on the flip side of that,lean on the investment bank to
help you prioritize, manage thatworkflow and set expectations
with the, with the buyer.
Um, it's, it's, that's part oftheir job.
emily-sander_1_12-10-2024_1 (12:49):
And I think, I mean, this is all
happening while you're doingyour day job.
And so part of the prep issetting it up so you can lift
out hopefully and someone canmaybe take point or just know
that, Hey, I'm not going to beas responsive or set up
processes.
Um, how long does diligencetypically take if there's a
typically, what is the, like,what are we talking weeks,
months, years, let's give peoplea broad brush here.
squadcaster-adea_1_12-10-2024 (13:11):
I put it on three to six months
typically,
ed-barton_1_12-10-2024_16024 (13:15):
Mm hmm.
squadcaster-adea_1_12-10-20 (13:15):
you know, and it could be anywhere
in between, um, depends on thecomplexity of the deal.
Depends on how simple yourbusiness is, you know, how, what
industry you're in as far as,you know, call it regulatory
hurdles go and things like that.
Um, you know, it depends on deepyour cap table is.
There's a lot of things thatcould go into.
(13:37):
know, whether you, you know,what, what hoops need to be
jumped through for you toactually sell your, your
business or the equity in yourbusiness or the assets of your
business, et cetera.
So there's really can run thegamut.
Um, you know, as your businessinternational focus, or is it
domestic?
The services based industrymanufacturing, totally
different, totally different,um, tracks in that way.
(13:58):
But it does come down to kind ofinvestigating.
same sorts of things just keepcoming back to the financials,
the market, the product, the,the legal, the compliance, the
operation, but it just hasdifferent levels of complexity.
I mean, in a service orientedbusiness where you don't really
have a physical workspace andyou know, it's not capital
intensive in terms of, you know,CapEx, then, you know, a lot of
(14:20):
that can be done prettyremotely, but if you're, you
know, buying a.
You know, um, oil, well, youknow, manufacturer, I mean,
that's pretty on the ground,
emily-sander_1_12-10-2024_1 (14:29):
Got to go inspect the oil well,
yeah,
squadcaster-adea_1_12-10-20 (14:31):
the dirt and see if it can be
fracked up or whatever the hell,you know, it's like there's
actual tangible things you needto touch in certain businesses.
Whereas I've personally workedfor mostly services based
businesses where it's.
Pretty light on that kind ofstuff, but you know, it can be
pretty intensive if it's a,know, a, a, a, a business that
involves a lot of people and alot of locations and a lot of,
(14:52):
uh, know, terra firma, let'ssay.
Yeah.
emily-sander_1_12-10-202 (14:56):
that's a good point.
And I think
ed-barton_1_12-10-2024_160249 (14:58):
I was going to
emily-sander_1_12-10-2024_1 (14:58):
the other thing I was just going to.
ed-barton_1_12-10-2024_1602 (15:00):
is, is you're running in parallel to
the diligence, the confirmatorydiligence, you're generally
running the process to put the,um, final agreements together,
so the asset purchase agreement,uh, or whatever format that
agreement is gonna, is gonnacome in.
squadcaster-adea_1_12-10- (15:15):
Yeah.
ed-barton_1_12-10-2024_160 (15:16):
they find in diligence then starts
another cycle through theagreement, because they go, Oh,
we've identified something wewant to, We want to have a rep
and warranty on that.
Or we want to have anindemnification against that.
Or we want to retrade the dealor we're going to have an
additional, you know, aadditional, like the, the, these
deals are like three inchesthick and they've got a bunch of
(15:37):
disclosures and I go, Oh, we'regoing to need to disclose this.
And so anytime
squadcaster-adea_1_12 (15:41):
attorneys are paid by the red line
keystroke.
You know what I mean?
Like some of these
ed-barton_1_12-10-2024_1602 (15:45):
we, we do, we do endeavor, we do
endeavor to, to make sure thatthe billable hours requirement
is met.
emily-sander_1_12-10-202 (15:52):
You're being thorough.
You're being very thorough.
Yes.
ed-barton_1_12-10-2024_16 (15:55):
where you're going to end up with a,
squadcaster-adea_1_12-10- (15:57):
Yeah.
ed-barton_1_12-10-2024_160 (15:58):
does that entire, you're running
multiple work streams and adiligence piece.
You may, you're going to havefinancial diligence, the tech
diligence, you know, riskdiligence with insurance, all
those things are runningparallel to the legal drafting
of the documents and anythingthat comes up in any of those
parallel work streams dumps intothe legal drafting of the
documents generally and willimpact the deal.
(16:21):
So.
then they go and iterate
emily-sander_1_12-10-2024_ (16:23):
It's a cyclical.
ed-barton_1_12-10-2024_1602 (16:25):
Why don't you look deeper at that?
squadcaster-adea_1_12-10- (16:27):
Yeah.
emily-sander_1_12-10-2024_1 (16:27):
and then how often are you running
multiple due diligence processesat once?
Like, could you be doing that?
ed-barton_1_12-10-2024_1602 (16:37):
not have, I was about to say during
the
squadcaster-adea_1_12-10- (16:40):
Yeah.
ed-barton_1_12-10-2024_1602 (16:42):
the kind of, we're out in, we're out
in market.
Um, we don't have indication ofinterest LOI.
You may have four or fivelooking at you at the same time.
Always.
similar, um, but somewhatdifferent, um, asks.
emily-sander_1_12-10-2024_ (16:56):
What about confirmatory diligence?
ed-barton_1_12-10-2024_160249 (16:58):
a confirmatory, you're normally
running one.
emily-sander_1_12-10-2024_1 (17:01):
One at a time.
ed-barton_1_12-10-2024_16024 (17:02):
my experience is we normally have,
you know, we pick, we we gothrough the beauty contest to
get the indications of interestor letters of intent.
You go, okay, This one's theprettiest.
I'm going to go out with her orhim and then that becomes the
one you're doing confirmatoryon.
And if, because again, as Rorynoted, it's millions, hundreds
of thousands to millions ofdollars.
(17:24):
And so both the person who'sdoing the diligence and the
company want to do, you know,they're not going to spin up
those cycles if they don't thinkthey're going to win the deal.
So you're generally going tohave one at that point.
Oh,
emily-sander_1_12-10-2024_1 (17:39):
And then,
squadcaster-adea_1_12-10-202 (17:39):
of some interesting ones actually.
I mean, know, in the last, uh,Last stop I was at prior to kind
of stepping out and doing someconsulting work, you know, I was
in an interesting position wheremy company was bought and there
was a diligence processassociated with that,
subsequently carved out and soldand there's a diligence process
(18:02):
with that all in basically this,this sort of, you know,
continuous cycle of like 18months of diligence work.
To do a couple of differenttransactions.
So, and I, you know, I've been,you know, kind of party to some
other situations too, where,know, uh, you know, uh, a
company's being acquired andthen immediately they're going
to go out and buy anotherbusiness, right?
(18:22):
Like, so there's just, know, youget to a certain point of
sophistication.
These PE groups are extremelysophisticated and this is what
they do, where they have theseas just part of their core
business.
So where to, but to Ed's pointearlier, and what we talked
about with.
Being on the, um, sort of sideof a founder or a company
selling, you know, for the firsttime or something like that.
(18:43):
It is absolutely new territoryand it can be really stressful
in the business, especially if adeal deal doesn't actually get
done.
So you go through all thisprocess only to basically have a
deal
emily-sander_1_12-10-2024_16 (18:55):
Ed looks sick.
Ed looks physically sick.
squadcaster-adea_1_12-10- (18:57):
yeah.
And I mean, that just, it, it'sa, it really takes a toll.
So, you know, it comes back towhat we've covered in our book
and our prior podcasts is like,be really clear on what your
objectives are to sell, youknow, what your, um, you know,
what, what, what, what pieces ofthat can you.
coordinate for and plan for getall your team in place before
(19:20):
you actually pull the trigger onthe process.
Cause a dead process is reallydeleterious to, know, your
business and your life, youknow, like you may have, you may
have been spending that moneybefore you got it.
You know what I mean?
Like that's
emily-sander_1_12-10-2024_ (19:33):
That never happens with founders.
Come on Rory.
ed-barton_1_12-10-2024_1602 (19:36):
and recognize, recognize what,
squadcaster-adea_1_12-10- (19:39):
later on, you
ed-barton_1_12-10-202 (19:39):
recognize what Rory just said, which is,
um, you know, it's, it'sincredibly stressful.
Recognize that diligence isrunning in parallel and you
don't want the, the process tobe a failed process.
So some of your more cutthroat,um, private equity firms will
(20:00):
give you a very attractiveletter of intent, indication of
interest.
Um, run you into diligence andthen retread the deal a couple
times.
emily-sander_1_12-10-2024_16 (20:08):
oh
ed-barton_1_12-10-2024_ (20:09):
because you're like, Oh,
squadcaster-adea_1_12-10-202 (20:10):
on this call might have done Yeah,
yeah,
ed-barton_1_12-10-2024_1602 (20:13):
you just don't, you're like, I just,
I,
squadcaster-adea_1_12-10-2 (20:16):
yeah
ed-barton_1_12-10-2024_160 (20:17):
like six months and I've just got to
be done.
And they go, well, you know,we're going to have to knock off
10 percent of the purchase pricebecause you know, we've
identified this, that, and theother thing.
So that's where the investmentbank is important because
they've generally dealt with theprivate equity folks before they
want to get a deal done.
You know, you can get someinsight both from the, from the
(20:37):
investment bankers as well as,you know, just kind of asking
around what's reputation of thisinvestment of the private equity
firm or growth capital firm thatyou're talking to.
And do they have a tendency toretrade deals?
Cause if they do, just beprepared for it and go into
diligence accordingly
emily-sander_1_12-10-2024 (20:53):
Well, and I mean some PE firms like
there's different personalitiesand approaches but some people
know that people get worn outIt's like oh my gosh, like all
this sunk cost has been sixmonths I'm, so tired just drag
this thing across the finishline And some people know that
and they're just they'll playthat game and some people are
like no I actually need to knowthis information to feel
comfortable You Giving you thisfunding.
ed-barton_1_12-10-2024_1602 (21:14):
buy a new car.
emily-sander_1_12-10-2024 (21:16):
Yeah.
ed-barton_1_12-10-2024_ (21:16):
they'll just wear you down until you
emily-sander_1_12-10-2024_1 (21:18):
Oh, I hate that.
Gosh.
I, oh,
ed-barton_1_12-10-2024_16 (21:20):
Well, it works.
squadcaster-adea_1_12-10-20 (21:22):
say this though, like, I think that,
you know, I think stats outthere would indicate, you know,
the average PE firm looks atprobably, you know, call it 30
to 50 deals a year, maybe do oneor two.
So, you know, um, once they dokind of get committed to a deal,
they do want to see it throughultimately, because it's, again,
it's a waste of their time andskill.
(21:43):
It's both tangible costs thatsunk, but it's also opportunity
costs that sunk if you spendmore time than you need to on a
deal.
So, I think that overall there'san inherent level of tension on
both sides that once you get toa certain point, you both do
want to see the finish line.
Because if they start to reallybelieve in your business and
believe, especially in themanagement team running the
(22:04):
business, like, You know,they're, they're seeing the
dollar signs and that's whatthey're, that's what they're
built to do is to deploy capitaland make money.
So you do have a inherentalignment I think, but yeah,
deals fall apart.
I've been part of those andit's, it sucks, but you know,
that's just how it goessometimes.
emily-sander_1_12-10-2024 (22:21):
okay.
So we've got this three to sixmonth long process.
It's very thorough, but ifyou're prepared, it can go
relatively smoothly.
If you know what you're gettinginto, um, as Faye says, no, it's
always just going to be kind ofa slog.
Um, let's talk about, Actually,let's talk about first how this
can go bad, how this can gobadly, and then talk about how
to make it go smoothly in goodcase scenarios.
(22:43):
So I have an example where, um,something big was missed during
due diligence, and it wasregarding a tech stack.
And one of the things, one ofthe things to note is, um, The
level of due diligence, Rory wasmentioning all the different
factors that go into the leveland level of effort of due
diligence.
One is how the investor is goingto use that company.
(23:05):
So for instance, we work for adata company and some potential
buyers just wanted our data.
So they, if they were to havebought us, they would have
gutted the thing and just takenthe data.
And that's what they wanted.
Other people might want likeyour, Customers and your tech
stack and your people and sothose might be things they, uh,
look at thoroughly.
(23:26):
So in this one instance, therewas, I don't know, like an
oversight or people weren't, um,looking hard enough or people
were being creative with howthey presented things, but the
tech stack was not.
Thoroughly investigated and thatcame back to bite us hard later
on and so um ed Do you want totalk through?
(23:48):
like what happens when whenthose things take place like
Clawbacks or clot is in place atthe beginning to kind of help
prevent or mitigate those things
ed-barton_1_12-10-2024_16 (23:58):
Yeah.
So there's a couple of differentways that, uh, those can be
mitigated.
The first, the first is you'vegot a, um, an escrow,
essentially, so the, so thedeal, you're going through the
deal process and something comesup and you're like, you know, Oh
crap, we've got to, you know,again, it comes up during
diligence.
So you talked about somethingthat was missed.
(24:18):
If it comes up during diligence,it's likely to get addressed
either in terms of a re trade.
Disclosure or, uh, anindemnification or a rep and
warrant.
If it doesn't get, if you repand warrant all this stuff, like
my tech stack is great andeverything's super and blah,
blah, blah, blah, blah.
And then it got missed.
you're likely to get into, youknow, what the technical term is
(24:40):
a pissing contest with the, as aseller, um, with the buyer post
sale.
Um, and there's generally thisconcept of an escrow where they
go, look, we're going to buy thecompany, let's say for a hundred
million, but we're going to hold10 million back and we're going
to true up any non collectiblereceivables or any claims that
we have that are larger than ade minimis amount.
(25:01):
That de minimis amount
emily-sander_1_12-10-2024_16 (25:02):
Is this like the security deposit
on an apartment?
ed-barton_1_12-10-2024_16024 (25:05):
It kind of is.
And they've got this thingcalled a basket where they may
go, you know, it's got to exceed500, 000.
And if it does, and we'll startdealing with it because they
know it's going to be a littlebit of a urination contest
between, you know, I agree, Idon't agree.
Um, in the case of that, uh,that you're talking about, which
I was involved in.
There was no rep and warrant onthe tech stack.
(25:27):
Um, the, and it had brought in athird party consultant.
Um, and so as a result, theissue was then between a private
equity firm and a third partyconsultant, not between the
private equity firm and theseller.
emily-sander_1_12-10-2024_16 (25:39):
Ah
ed-barton_1_12-10-2024_ (25:40):
repped, repped or warranted as far as
that.
So it then fell to the portfoliocompany, IEU and I, and several
others to get that fixed youknow, what would have been a,
no, this is all good andeverything's great.
And here's the SOC report andall the other good stuff on the
tech stack.
And then it fails, then it couldbe on the seller.
emily-sander_1_12-10-2024_ (26:02):
what happens ed or rory if i'm going
to say hypothetically but we mayor may not have been involved in
this too where a founder wouldIntentionally steer the due
diligence folks away fromcertain information or just flat
out lie.
Like what if someonehypothetically just like flat
out lies about the state oftheir tech or company or
(26:23):
whatever.
squadcaster-adea_1_12-10 (26:25):
That's a, that's a, that's not a good
method to take.
Um, uh, I think that on theextreme side, you know, it could
lead to downstream litigationand, you know, other punitive
ways of compensating for thoselies and omissions.
Um, At the very least, it erodestrust completely, um, I'd say.
(26:50):
And trust is such a big part ofbusiness and life.
And especially in these dealswhere you're talking about large
sums of money.
So, um, it happens though.
Um, I think some people.
Have a hard time walking thatblurred line between, know,
overselling your business withmaybe not evil intentions versus
out and out lying.
(27:11):
I do think that some of thosethings happen without ill
intent, rather just saying, Hey,I'm, I'm highlighting the good,
right?
So, but what happens, you know,many things could happen, not
the least of which is.
a deal falling apart or, youknow, a purchase price being
reduced, um, to account forwhatever that is, plus some
(27:32):
punitive retrade because, um,you know, and then we're, we'll
certainly travel about thatbusiness and that.
Founder or whomever it is, know,you might have a real hard time
marketing your business oryourself as part of that
business in the future if youtake that tax, so definitely not
wise.
emily-sander_1_12-10-2024 (27:50):
Okay, any other warning stories or
just hey, here's how to makethis process
squadcaster-adea_1_12-10- (27:56):
Yeah,
emily-sander_1_12-10-2024_16 (27:57):
as less, you know, as painless as
possible.
squadcaster-adea_1_12-10- (28:02):
yeah, I'd like to say it always starts
kind of before you go down thepath.
And I think what I like to callgood corporate hygiene is
something to focus on, you know,you know, you're going to be
sharing deep information withqualified parties.
So make sure the information youend up sharing is.
really well organized, tells theright story in a truthful way.
(28:25):
Um, and you know, you, you, youdon't leave any stone really
unturned because time can killdeals.
So the faster you move throughyour diligence process, the more
likely are to get a good dealdone.
Um, let alone at the purchaseprice that may have been coming
through at the letter of intentlevel, which is always kind of a
headline price.
(28:46):
Um, so just prepare ahead ofyou, if you can, I like to
suggest that companies set up adata room well in advance,
populate that thing and continueto evolve it as information
becomes more, um, updated.
So as you grow your client base,as you add new contracts, as
your financials evolve, justhave a habit of keeping a data
room populated.
So when the time comes, you'renot scrambling to put it all
(29:08):
together in short order,probably missing some things,
um, not giving, Proper level ofscrutiny to it.
And then just start off on theright foot, you know, um, make
it easy for the suitors to lookat your information and have
conversation with you about it.
You know, make disclosures, uh,you know, that are reasonable.
So people like they're going tofind things regardless.
(29:29):
Um, and we talked about that inthe book, so you might as well
get it out there in the, in the,the way that makes sense.
Um, know, if there's questionsabout some of the things in your
business
emily-sander_1_12-10-2024_ (29:39):
What are, what are some of the core
pieces that you can and shouldput in that data room knowing
that you don't know the buyeryet, you don't know the exact
type of diligence that's goingto be conducted, but they're
always going to want to knowabout these things.
ed-barton_1_12-10-2024_16 (29:53):
Well, I was going to say there,
there's a few things that, uh,you know, start, start with the,
what would you want to know?
squadcaster-adea_1_12-10-2 (30:01):
Yes.
Great.
ed-barton_1_12-10-2024_1602 (30:02):
So, so, you know, if you were going
out to buy this business, whatwould you want to know?
emily-sander_1_12-10-2024 (30:07):
Yeah.
ed-barton_1_12-10-2024_1602 (30:08):
the second thing you need to put in
there is what don't they knowthat if they find out is going
to blow this deal up and put itin there, because if you don't,
they will find it.
And that's the fastest way.
So, you know, most of the dealsthat I've seen between private
equity and founders, they end upgoing sideways at some point.
(30:28):
Now, sometimes they pull it backtogether and other times it goes
off the rails and then you gotto change and then you get
changed out as a founder.
And that can be, you know,obviously a very distressing
experience.
The fastest way to get yourselffired from your own company, if
it's private equity sold, is tonot be forthcoming in diligence.
And because now you've destroyedthe trust that you theoretically
(30:50):
were supposed to be buildingover the course of that
diligence period.
That's something that they arelooking for.
Is this, is this managementteam, a management team we can
trust, that we can work with?
We're about to invest tens ofmillions or hundreds of millions
of dollars of our limitedpartner's capital.
Can we trust these folks to begood stewards of that capital?
And so, number one is putanything in there that you would
(31:11):
want to know.
So, financial statements.
squadcaster-adea_1_12-10-2 (31:13):
Yep.
ed-barton_1_12-10-2024_160 (31:14):
any, you know, disclosures around
lawsuits or, you know, andpeople issues and any of those
things that are, you know, somerisk factors and opportunities
as well.
So it's not all negative, but,um, and then anything that, if
it's going to blow the deal up,if it gets found out later, get
it out on the table.
Actually, you should be talkingto the investment banker about
that before the deal goes tomarket on how best to position
(31:35):
it because they can use it as abuy, as a buying opportunity.
So our tech stack is terrible.
Okay, fine.
This is a great opportunity tofind a strategic buyer or a
private equity firm that mayhave somebody in their portfolio
where that becomes a competitiveadvantage to them in the deal
space.
And then the, the investmentbank can position you in a way
(31:56):
that, you know, they turn anegative into a positive or at
least a neutral
squadcaster-adea_1_12-10-2 (32:00):
Yep.
Exactly.
emily-sander_1_12-10-2024_1 (32:02):
And I think a good guideline for
people is just, they will findeverything.
It's just a matter of when.
And so like you need to bestrategic about when you
disclose that because they willfind.
Everything.
And so you want that to be allup front and like Ed and Rory
were just mentioning, you mightthink this is the worst thing in
the world.
Like, Oh, Oh shit.
(32:22):
Like this, I can't tell themthis.
They might go, Oh, I can flipthat into an advantage or like,
Oh, we've seen that before.
That's not that bad.
That's just an opportunity wecan have to create an
efficiency.
squadcaster-adea_1_ (32:34):
Information is power both ways in a way.
Like you, you, you share moreinformation to help them
understand your business more.
It's possible that in theirinitial look at your business,
they're missing someopportunities that you might be
able to articulate with what youshare.
Yeah.
You couple that with havingmultiple players at the table
that have maybe, you know,slightly different, uh,
perspectives on what they wantto do with your business.
(32:55):
Once they acquire it, could turninto higher valuation for you.
Again, don't hold back because,know, you know, you get a
diligence request list and itonly has certain things on it.
If you have things thataccentuate your business in a
favorable yet truthful way, thatis the quickest way to convince
somebody that they, need to payhigher value for your business
(33:16):
if you can articulate with dataand information for sure rather
than just pure anecdote for sure
emily-sander_1_12-10-2024 (33:22):
Yeah.
And I think what we're talkingabout here is the best way to
increase the valuation of thecompany, which is through this
process, which is thorough andcan be like overwhelming.
Sometimes it is just havingthese conversations and
establishing this foundation oftrust where just these layers
and these different stories thatyou're able to tell.
And you have these conversationslike, yep, we did this by duct
(33:43):
tape and yarn because that'swhat we had.
And so this is what it is today.
Yeah.
Given funding, we can make thisbetter.
So I think telling those storiesall throughout the process and
just developing that rapport is,is where it goes well,
ed-barton_1_12-10-2024_160 (33:55):
hmm.
emily-sander_1_12-10-2 (33:55):
anything else either of you would add of,
you know, here's a smooth duediligence process, or here's how
you really optimize thisprocess.
ed-barton_1_12-10-2024_160249 (34:05):
I think one of the biggest, one of
the biggest things is, and wetalked about this in one of the
prior episodes, is have yourteam assembled ahead.
Work with the investment banker.
They've been through, they dothis for a living, right?
So you can work through, um,the, they'll talk you through,
walk you through what's going toget looked at, where the major
(34:26):
issues are.
Treat them as kind of yourtrusted advisor, because they
are, they need to be.
And it all out there and helpthem.
Help them understand yourbusiness better so they can help
you position the business betterand get you through diligence.
I can't, um, I can't stressenough that having that team put
together, your attorneys, youraccountants, your, and most of
(34:46):
all, your investment banker inthis particular case, and a good
one who's been through thesethings before, will be able to
help you lay out all of that andprep you, uh, for diligence so
that your data room's ready,you're, you've been kind of
wired with questions andanswers.
Um, and they know who the buyinguniverse is and they're going to
put you in a good position towin.
squadcaster-adea_1_12-10-2 (35:08):
Work with people that have done it a
lot, you know Um, even if youdon't have that resource on
staff there are a lot of outthere consultants that have done
this many times and that youknow could be minimally invasive
to your core business withoutyou know, disrupting other
people doing their corebusiness.
If you're in the early stages oryou haven't really like full on
(35:29):
went, went full speed ahead.
So, you know, just like you havelawyers and accountants and so
forth as kind of external, youknow, consultancy work with, or
parties you work with, know,folks that have worked in Corp
dev and, you know, runbusinesses that have been
acquired, bought and sold, youknow, they can add a lot of
value on a fractional orconsultancy basis.
emily-sander_1_12-10-2024 (35:50):
Yeah, and I think just know that as a
founder, you're a genius in whatyou do.
Like you've built this companyand it's okay if you don't know
how to do these other things,but other people are experts,
experts in these areas.
And so you want to partner withthem and assemble a team so they
can help you in those ways.
And if you're like, Again, ifyou're like, I don't know
investment bank from like my ATMmachine or whatnot, we have
(36:14):
resources that can help you.
So we'll drop those in the shownotes for a list of reputable
investment banks and differentfinancial advisors that you can
work with.
And you can always check out ournew resources at private equity
experience.
com.
But now, you know about duediligence, a very important part
of the process.
So thanks, Ed.
Thanks, Rory.
Catch you next time.
squadcaster-adea_1_12-10- (36:34):
Thank you.
ed-barton_1_12-10-2024_16 (36:35):
Thank you.
Ed Rory, dilly, dilly, due
diligence,
ed-barton_1_12-10-2024_1 (00:37):
dilly.
emily-sander_1_12-10-202 (00:38):
dilly, dilly,
ed-barton_1_12-10-2024_1 (00:39):
dilly.
emily-sander_1_12-10-2024_1 (00:41):
due diligence.
What is this and where does itfit into the process?
squadcaster-adea_1_12-10-202 (00:48):
in business or in life.
Cause it could be applicable inso many
emily-sander_1_12-10-2024_1 (00:51):
How do you conduct due diligence on
potential partners?
No, we're talking aboutbusiness.
Let's do, well, I guess thatcould be used for both business
and personal.
It's all the same.
Do you create spreadsheets andvirtual data rooms for your
potential?
ed-barton_1_12-10-2024_16 (01:08):
Dilly dilly.
emily-sander_1_12-10-2024_1 (01:09):
You probably do actually
ed-barton_1_12-10-2024_16 (01:10):
Dilly
emily-sander_1_12-10-2024_ (01:11):
you, you, you think in spreadsheets.
Um, no.
So we're talking about duediligence.
When someone is looking to buyyour company, they are going to
conduct due diligence as wouldmake sense.
If you are going to investmillions and millions of dollars
in a company, you want to knowwhat's going on.
What's up?
And so due diligence is theofficial process and way of
(01:34):
figuring out what's up with thiscompany.
squadcaster-adea_1_12-10-20 (01:38):
the heart of it.
Um, due diligence is really, itis a deep investigation into the
information supporting adecision, a transaction.
you know, uh, you know, uh, uh,an action that you're looking to
take.
So at the heart of it, you'rejust doing investigative work on
(02:01):
a potential outcome you'retrying to consider basically.
emily-sander_1_12-10-2024_ (02:05):
Are, are P.
E.?
ed-barton_1_12-10-2024_1602 (02:06):
due diligence, was going to say the
due diligence process is thedriver for your valuation, all
things being equal.
you know, you've got a businessand what that process does is
basically you've said, mybusiness does all these
wonderful things and it's gotthese capabilities and.
You know, we're the best, youknow, shoe manufacturer in the
(02:27):
United States and you need tobuy us.
And due diligence is really theconfirmation of all the things
you're claiming.
And so it's, it's a very, it canbe a very, very, very deep dive.
squadcaster-adea_1_12-10-20 (02:42):
And I mean, it covers various things
under the umbrella of duediligence.
I mean, you have financial duediligence, you have legal due
diligence, you have operationaldue diligence, you have due
diligence, I mean, everythingthat goes into.
A business that comes underscrutiny during a time of, let's
say or M& A or, or, or sort of atransaction that's all wrapped
(03:05):
up in this concept of duediligence, you're really, you
know, deep diving on thebusiness entirely, as Ed said,
um, in, you know, oftentimes avery compressed amount of time.
So it becomes a very criticaland oftentimes stressful part of
that deal framework.
emily-sander_1_12-10-2024_ (03:23):
Yes, and so are they, would you say
they're trying to find thingsquote unquote wrong with it, or
they're trying, I mean, we usethe analogy of like buying a
house, and so when someone goesin for inspection, they're
They're looking for things tolike, let me pay less.
Are they looking for that?
Are they looking for noconfirmatory evidence that we
want to buy this thing or justtell us what's going on under
(03:45):
the hood so we can makeadjustments and then decide to
move forward and have a planfrom there.
ed-barton_1_12-10-2024_1602 (03:51):
All of the above?
Truly, it is truly all theabove.
Really, really, I've generallysaid you've got a couple of
phases of due diligence.
there's a, there's a, there'sgoing to be first phase or
preliminary due diligence wherethey're really trying to get a
feel for the business, theoperations, the, how you do
(04:12):
things, the, management team,they're not digging deep, but
they, they're digging broad andgoing, okay, do we really feel
like we've got a goodunderstanding of this?
and that's normally done ifyou're, if you're in a
transaction, that's normallydone, um, kind of after the
first set of meetings.
There's the lobe and parts ofthe data room and kind of let,
(04:34):
let the potential buyers go inbefore they submit their letter
of intent or indication ofinterest.
then there's, once you kind ofget through that, on their side,
on the private equity purchasersside, they've come up with that
thesis, investment thesis.
This is what we think theinvestment can do.
This is what we expect to beable to get for efficiencies.
(04:54):
This is what we can do from acapital perspective for, you
know, balance sheet engineering.
And then.
You go to the next phase ofdiligence, which is confirmatory
diligence, which is a going now,we want to confirm all the
assumptions that we've put inthere and we want to make sure
that there's no surprises.
Now, everybody knows there'salways going to be surprises,
but the fewer surprises, thebetter.
(05:15):
And the more you can cooperateand disclose, you know, we talk
about finance theory in, in, inthis pod.
So the, the you can disclose,the lower the risk premium,
which means a higher.
The higher the value of thebusiness.
So I, so that, but that thosetwo phases of diligence are
important because they'relooking at very different
(05:37):
things.
One is coming up with a thesis,understanding the business
before they put an indication ofinterest or LOI in.
And then the second is really toconfirm all those assumptions
and try and make sure thatthere's no surprises.
emily-sander_1_12-10-2024 (05:49):
Yeah.
So the first one is kind of likea surface level.
Like, let me just sniff aroundand get, get a lay of the land.
And then the second one, I'veheard someone on this podcast
described as like a anal probewhere it's like, okay, we're
doing a full look at the insideof this business.
Yes.
ed-barton_1_12-10-2024_16 (06:06):
exam.
The, the, the, the other pieceis for founders and management
teams to recognize is diligencestarts at the time you sign up
the investment banker.
So the investment banker isgoing to do diligence on you to
make sure you're ready.
A lot of times they're on acontingency fee, so they don't
want to burn cycles, um, withoutfeeling like you've got a
(06:28):
transactable business.
And then after that, when you'vegot prospective buyers,
diligence starts with theirfirst teaser and your first
conversation.
They're going, okay, is thissomebody who I can partner with?
How does he make, how do theymake me feel?
Are they smart?
Me?
Do I feel like this is, youknow, they're trying to hide
something.
So diligence starts atpreliminary diligence or, or
(06:50):
kind of initial diligence phasestarts the minute you decide to
start putting your business onthe, on the market.
And doesn't end until after thedeal closes.
squadcaster-adea_1_12-10- (07:01):
Every piece of information that is
shared between parties issubject to scrutiny, um, you
know, challenge, um, validationand, and that's what comprises
due diligence.
And what I would say as well is,you know, Due diligence is a
very costly process for allinvolved and we can get into You
know the the throws of it, butbasically, you know I've been
(07:24):
part of deals where I know for afact that the other side the
potential acquiring party isspending millions of dollars to
Validate this as a potentialtransaction.
So while I agree with ed's broadstatement that they're looking
for, you know Validation eitherway i'd say most parties get to
(07:45):
this phase of deep diligenceWith the intent that they can
move forward with the dealthere.
They're, you know, they don'twant to spend millions of
dollars for nothing.
There's something in the gameskin wise for all parties at a
certain point, but upfront,yeah, I think, that's why the
due diligence process is done.
As I'd said, in a phased manner,typically.
(08:05):
What I've observed is that, youknow, the customer due
diligence, the market duediligence, the, the, the, the
things that underpin thebusiness, your business model is
kind of what's pushed up frontso that that can be validated
first, followed by financial duediligence.
And then lastly, which gets tobe kind of the most expensive
piece of it is the legal duediligence.
(08:27):
All of the stuff involved withthat, um, you know, regulatory
due diligence, compliance duediligence, that's stuff that
need to validate, but if youcan't get past the business
diligence, um, and the financialdiligence, you're, there's no
point in spending the money andenergy on all the other
supplementary pieces of that.
Very
emily-sander_1_12-10-2024 (08:45):
Okay.
So this process.
The later stages of it are verythorough.
I'm going to use that word, butthis is also critical to
determining the valuation.
So if you're a founder, you wantto pay attention and be ready
for this, which is part of whyyou listen to this podcast.
So we can kind of tell youwhat's coming your way,
squadcaster-adea_1_12-10-2 (09:02):
hmm.
emily-sander_1_12-10-2024_1 (09:02):
but how, how does this process work?
Like who on the PE team are yougoing to be dealing with?
What are green flags?
What are red flags?
Just how does this process work?
If you're like a first timefounder going through due
diligence.
squadcaster-adea_1_12-10- (09:16):
yeah, exactly right.
And I think you kind of touchedon it there.
Green flags, red flags.
I think, you know, red flags arethe things that people really,
uh, you know, kind of expect tofind in some ways.
Just every business has its ownlittle, little skeletons in the
closet.
It seems, you know, things likethat.
But the point is to get yourarms around that doesn't mean
(09:36):
just because those exist, thatthere's not a deal to be done.
emily-sander_1_12-10-202 (09:39):
Right.
squadcaster-adea_1_12-10-2 (09:40):
them and you understand the
implications, Yeah, yeah.
usually get past these things,but it's those green flags that
are interesting.
I mean, I was just having aseparate conversation with Ed
about a deal he was involvedwith where, you know, I know Ed
was doing deep diligence andfound some opportunities and
then closed the deal.
And it turns out thoseopportunities are green flags
and there's going to be a betterdeal, uh, than what he paid for
(10:01):
prospectively, you know, sothose are things that can
happen, that's only a result ofthe thorough work being done on
the buying party.
And then the heavy work doing onthe party that's selling and
getting the information puttogether in a way that can be
digested and relied upon andultimately trusted at the end of
the day.
ed-barton_1_12-10-2024_1602 (10:19):
the one thing to keep in mind, I
think if you're a foundingmanagement team and you haven't
been through this before, is beprepared to be overwhelmed.
the reason I say that is whenthe diligence starts, you're
going to have, it's going to bea couple of private equity
folks, you'll have an associate,a principal, or a VP level, a
director, a managing director.
(10:40):
So it'll be three or four folksthat will be playing from the
private equity side.
Once you move to theconfirmatory.
As Rory noted, you know, thelast deal where I was on sell
side, the buyer probably spent22 to 25 percent of the purchase
price on diligence.
squadcaster-adea_1_12-10- (10:57):
Yeah.
ed-barton_1_12-10-2024_16024 (10:58):
so it was a 20 million deal.
They may have spent 5 million ondiligence.
So it was, it was a ridiculous,uh, it was ridiculous for my
seat as a seller, ridiculousdiligence.
squadcaster-adea_1_12-10- (11:08):
Yeah.
ed-barton_1_12-10-2024_1602 (11:08):
but you had, you had not only did
you have the private equityfolks, You had their operating
partners were involved in theirvarious areas.
So you had folks basically whowere kind of the acquiring
company, CFO, the acquiringcompany.
So it was private equity backed.
A merger with one of their otherportfolio companies, so you have
their operating partners in.
(11:30):
They had IT consultants come into look at the systems and
determine what technical debtneeded to be retired or what we
should do with our stack.
They had accounting folks comein, including forensic type
accountants to be able to goback through our, all of our,
um, transactions over the lastcouple of years and determine
because we had non operatinglosses whether it was, you know,
(11:51):
more beneficial to, to acquirethe operating entity.
Um, or to acquire the assets.
They had, um, legal duediligence, include two different
law firms, one for intellectualproperty and another one for
transaction.
Um, so it was, and, and it wasjust, you know, there was just
like four of us on themanagement side trying to juggle
all that stuff.
squadcaster-adea_1_12-10- (12:10):
Yeah,
ed-barton_1_12-10-2024_1602 (12:11):
and you had another consulting firm
coming in to validate the marketanalysis, um, that we had
provided for a couple of ourproducts.
So it was, it was, oh, it wasoverwhelming as on the sell side
and just be prepared to All of asudden have an army of
consultants, accountants,lawyers, scientists and
everybody else descend upon youand be requesting tons of
(12:32):
information.
And on the flip side of that,lean on the investment bank to
help you prioritize, manage thatworkflow and set expectations
with the, with the buyer.
Um, it's, it's, that's part oftheir job.
emily-sander_1_12-10-2024_1 (12:49):
And I think, I mean, this is all
happening while you're doingyour day job.
And so part of the prep issetting it up so you can lift
out hopefully and someone canmaybe take point or just know
that, Hey, I'm not going to beas responsive or set up
processes.
Um, how long does diligencetypically take if there's a
typically, what is the, like,what are we talking weeks,
months, years, let's give peoplea broad brush here.
squadcaster-adea_1_12-10-2024 (13:11):
I put it on three to six months
typically,
ed-barton_1_12-10-2024_16024 (13:15):
Mm hmm.
squadcaster-adea_1_12-10-20 (13:15):
you know, and it could be anywhere
in between, um, depends on thecomplexity of the deal.
Depends on how simple yourbusiness is, you know, how, what
industry you're in as far as,you know, call it regulatory
hurdles go and things like that.
Um, you know, it depends on deepyour cap table is.
There's a lot of things thatcould go into.
(13:37):
know, whether you, you know,what, what hoops need to be
jumped through for you toactually sell your, your
business or the equity in yourbusiness or the assets of your
business, et cetera.
So there's really can run thegamut.
Um, you know, as your businessinternational focus, or is it
domestic?
The services based industrymanufacturing, totally
different, totally different,um, tracks in that way.
(13:58):
But it does come down to kind ofinvestigating.
same sorts of things just keepcoming back to the financials,
the market, the product, the,the legal, the compliance, the
operation, but it just hasdifferent levels of complexity.
I mean, in a service orientedbusiness where you don't really
have a physical workspace andyou know, it's not capital
intensive in terms of, you know,CapEx, then, you know, a lot of
(14:20):
that can be done prettyremotely, but if you're, you
know, buying a.
You know, um, oil, well, youknow, manufacturer, I mean,
that's pretty on the ground,
emily-sander_1_12-10-2024_1 (14:29):
Got to go inspect the oil well,
yeah,
squadcaster-adea_1_12-10-20 (14:31):
the dirt and see if it can be
fracked up or whatever the hell,you know, it's like there's
actual tangible things you needto touch in certain businesses.
Whereas I've personally workedfor mostly services based
businesses where it's.
Pretty light on that kind ofstuff, but you know, it can be
pretty intensive if it's a,know, a, a, a, a business that
involves a lot of people and alot of locations and a lot of,
(14:52):
uh, know, terra firma, let'ssay.
Yeah.
emily-sander_1_12-10-202 (14:56):
that's a good point.
And I think
ed-barton_1_12-10-2024_160249 (14:58):
I was going to
emily-sander_1_12-10-2024_1 (14:58):
the other thing I was just going to.
ed-barton_1_12-10-2024_1602 (15:00):
is, is you're running in parallel to
the diligence, the confirmatorydiligence, you're generally
running the process to put the,um, final agreements together,
so the asset purchase agreement,uh, or whatever format that
agreement is gonna, is gonnacome in.
squadcaster-adea_1_12-10- (15:15):
Yeah.
ed-barton_1_12-10-2024_160 (15:16):
they find in diligence then starts
another cycle through theagreement, because they go, Oh,
we've identified something wewant to, We want to have a rep
and warranty on that.
Or we want to have anindemnification against that.
Or we want to retrade the dealor we're going to have an
additional, you know, aadditional, like the, the, these
deals are like three inchesthick and they've got a bunch of
(15:37):
disclosures and I go, Oh, we'regoing to need to disclose this.
And so anytime
squadcaster-adea_1_12 (15:41):
attorneys are paid by the red line
keystroke.
You know what I mean?
Like some of these
ed-barton_1_12-10-2024_1602 (15:45):
we, we do, we do endeavor, we do
endeavor to, to make sure thatthe billable hours requirement
is met.
emily-sander_1_12-10-202 (15:52):
You're being thorough.
You're being very thorough.
Yes.
ed-barton_1_12-10-2024_16 (15:55):
where you're going to end up with a,
squadcaster-adea_1_12-10- (15:57):
Yeah.
ed-barton_1_12-10-2024_160 (15:58):
does that entire, you're running
multiple work streams and adiligence piece.
You may, you're going to havefinancial diligence, the tech
diligence, you know, riskdiligence with insurance, all
those things are runningparallel to the legal drafting
of the documents and anythingthat comes up in any of those
parallel work streams dumps intothe legal drafting of the
documents generally and willimpact the deal.
(16:21):
So.
then they go and iterate
emily-sander_1_12-10-2024_ (16:23):
It's a cyclical.
ed-barton_1_12-10-2024_1602 (16:25):
Why don't you look deeper at that?
squadcaster-adea_1_12-10- (16:27):
Yeah.
emily-sander_1_12-10-2024_1 (16:27):
and then how often are you running
multiple due diligence processesat once?
Like, could you be doing that?
ed-barton_1_12-10-2024_1602 (16:37):
not have, I was about to say during
the
squadcaster-adea_1_12-10- (16:40):
Yeah.
ed-barton_1_12-10-2024_1602 (16:42):
the kind of, we're out in, we're out
in market.
Um, we don't have indication ofinterest LOI.
You may have four or fivelooking at you at the same time.
Always.
similar, um, but somewhatdifferent, um, asks.
emily-sander_1_12-10-2024_ (16:56):
What about confirmatory diligence?
ed-barton_1_12-10-2024_160249 (16:58):
a confirmatory, you're normally
running one.
emily-sander_1_12-10-2024_1 (17:01):
One at a time.
ed-barton_1_12-10-2024_16024 (17:02):
my experience is we normally have,
you know, we pick, we we gothrough the beauty contest to
get the indications of interestor letters of intent.
You go, okay, This one's theprettiest.
I'm going to go out with her orhim and then that becomes the
one you're doing confirmatoryon.
And if, because again, as Rorynoted, it's millions, hundreds
of thousands to millions ofdollars.
(17:24):
And so both the person who'sdoing the diligence and the
company want to do, you know,they're not going to spin up
those cycles if they don't thinkthey're going to win the deal.
So you're generally going tohave one at that point.
Oh,
emily-sander_1_12-10-2024_1 (17:39):
And then,
squadcaster-adea_1_12-10-202 (17:39):
of some interesting ones actually.
I mean, know, in the last, uh,Last stop I was at prior to kind
of stepping out and doing someconsulting work, you know, I was
in an interesting position wheremy company was bought and there
was a diligence processassociated with that,
subsequently carved out and soldand there's a diligence process
(18:02):
with that all in basically this,this sort of, you know,
continuous cycle of like 18months of diligence work.
To do a couple of differenttransactions.
So, and I, you know, I've been,you know, kind of party to some
other situations too, where,know, uh, you know, uh, a
company's being acquired andthen immediately they're going
to go out and buy anotherbusiness, right?
(18:22):
Like, so there's just, know, youget to a certain point of
sophistication.
These PE groups are extremelysophisticated and this is what
they do, where they have theseas just part of their core
business.
So where to, but to Ed's pointearlier, and what we talked
about with.
Being on the, um, sort of sideof a founder or a company
selling, you know, for the firsttime or something like that.
(18:43):
It is absolutely new territoryand it can be really stressful
in the business, especially if adeal deal doesn't actually get
done.
So you go through all thisprocess only to basically have a
deal
emily-sander_1_12-10-2024_16 (18:55):
Ed looks sick.
Ed looks physically sick.
squadcaster-adea_1_12-10- (18:57):
yeah.
And I mean, that just, it, it'sa, it really takes a toll.
So, you know, it comes back towhat we've covered in our book
and our prior podcasts is like,be really clear on what your
objectives are to sell, youknow, what your, um, you know,
what, what, what, what pieces ofthat can you.
coordinate for and plan for getall your team in place before
(19:20):
you actually pull the trigger onthe process.
Cause a dead process is reallydeleterious to, know, your
business and your life, youknow, like you may have, you may
have been spending that moneybefore you got it.
You know what I mean?
Like that's
emily-sander_1_12-10-2024_ (19:33):
That never happens with founders.
Come on Rory.
ed-barton_1_12-10-2024_1602 (19:36):
and recognize, recognize what,
squadcaster-adea_1_12-10- (19:39):
later on, you
ed-barton_1_12-10-202 (19:39):
recognize what Rory just said, which is,
um, you know, it's, it'sincredibly stressful.
Recognize that diligence isrunning in parallel and you
don't want the, the process tobe a failed process.
So some of your more cutthroat,um, private equity firms will
(20:00):
give you a very attractiveletter of intent, indication of
interest.
Um, run you into diligence andthen retread the deal a couple
times.
emily-sander_1_12-10-2024_16 (20:08):
oh
ed-barton_1_12-10-2024_ (20:09):
because you're like, Oh,
squadcaster-adea_1_12-10-202 (20:10):
on this call might have done Yeah,
yeah,
ed-barton_1_12-10-2024_1602 (20:13):
you just don't, you're like, I just,
I,
squadcaster-adea_1_12-10-2 (20:16):
yeah
ed-barton_1_12-10-2024_160 (20:17):
like six months and I've just got to
be done.
And they go, well, you know,we're going to have to knock off
10 percent of the purchase pricebecause you know, we've
identified this, that, and theother thing.
So that's where the investmentbank is important because
they've generally dealt with theprivate equity folks before they
want to get a deal done.
You know, you can get someinsight both from the, from the
(20:37):
investment bankers as well as,you know, just kind of asking
around what's reputation of thisinvestment of the private equity
firm or growth capital firm thatyou're talking to.
And do they have a tendency toretrade deals?
Cause if they do, just beprepared for it and go into
diligence accordingly
emily-sander_1_12-10-2024 (20:53):
Well, and I mean some PE firms like
there's different personalitiesand approaches but some people
know that people get worn outIt's like oh my gosh, like all
this sunk cost has been sixmonths I'm, so tired just drag
this thing across the finishline And some people know that
and they're just they'll playthat game and some people are
like no I actually need to knowthis information to feel
comfortable You Giving you thisfunding.
ed-barton_1_12-10-2024_1602 (21:14):
buy a new car.
emily-sander_1_12-10-2024 (21:16):
Yeah.
ed-barton_1_12-10-2024_ (21:16):
they'll just wear you down until you
emily-sander_1_12-10-2024_1 (21:18):
Oh, I hate that.
Gosh.
I, oh,
ed-barton_1_12-10-2024_16 (21:20):
Well, it works.
squadcaster-adea_1_12-10-20 (21:22):
say this though, like, I think that,
you know, I think stats outthere would indicate, you know,
the average PE firm looks atprobably, you know, call it 30
to 50 deals a year, maybe do oneor two.
So, you know, um, once they dokind of get committed to a deal,
they do want to see it throughultimately, because it's, again,
it's a waste of their time andskill.
(21:43):
It's both tangible costs thatsunk, but it's also opportunity
costs that sunk if you spendmore time than you need to on a
deal.
So, I think that overall there'san inherent level of tension on
both sides that once you get toa certain point, you both do
want to see the finish line.
Because if they start to reallybelieve in your business and
believe, especially in themanagement team running the
(22:04):
business, like, You know,they're, they're seeing the
dollar signs and that's whatthey're, that's what they're
built to do is to deploy capitaland make money.
So you do have a inherentalignment I think, but yeah,
deals fall apart.
I've been part of those andit's, it sucks, but you know,
that's just how it goessometimes.
emily-sander_1_12-10-2024 (22:21):
okay.
So we've got this three to sixmonth long process.
It's very thorough, but ifyou're prepared, it can go
relatively smoothly.
If you know what you're gettinginto, um, as Faye says, no, it's
always just going to be kind ofa slog.
Um, let's talk about, Actually,let's talk about first how this
can go bad, how this can gobadly, and then talk about how
to make it go smoothly in goodcase scenarios.
(22:43):
So I have an example where, um,something big was missed during
due diligence, and it wasregarding a tech stack.
And one of the things, one ofthe things to note is, um, The
level of due diligence, Rory wasmentioning all the different
factors that go into the leveland level of effort of due
diligence.
One is how the investor is goingto use that company.
(23:05):
So for instance, we work for adata company and some potential
buyers just wanted our data.
So they, if they were to havebought us, they would have
gutted the thing and just takenthe data.
And that's what they wanted.
Other people might want likeyour, Customers and your tech
stack and your people and sothose might be things they, uh,
look at thoroughly.
(23:26):
So in this one instance, therewas, I don't know, like an
oversight or people weren't, um,looking hard enough or people
were being creative with howthey presented things, but the
tech stack was not.
Thoroughly investigated and thatcame back to bite us hard later
on and so um ed Do you want totalk through?
(23:48):
like what happens when whenthose things take place like
Clawbacks or clot is in place atthe beginning to kind of help
prevent or mitigate those things
ed-barton_1_12-10-2024_16 (23:58):
Yeah.
So there's a couple of differentways that, uh, those can be
mitigated.
The first, the first is you'vegot a, um, an escrow,
essentially, so the, so thedeal, you're going through the
deal process and something comesup and you're like, you know, Oh
crap, we've got to, you know,again, it comes up during
diligence.
So you talked about somethingthat was missed.
(24:18):
If it comes up during diligence,it's likely to get addressed
either in terms of a re trade.
Disclosure or, uh, anindemnification or a rep and
warrant.
If it doesn't get, if you repand warrant all this stuff, like
my tech stack is great andeverything's super and blah,
blah, blah, blah, blah.
And then it got missed.
you're likely to get into, youknow, what the technical term is
(24:40):
a pissing contest with the, as aseller, um, with the buyer post
sale.
Um, and there's generally thisconcept of an escrow where they
go, look, we're going to buy thecompany, let's say for a hundred
million, but we're going to hold10 million back and we're going
to true up any non collectiblereceivables or any claims that
we have that are larger than ade minimis amount.
(25:01):
That de minimis amount
emily-sander_1_12-10-2024_16 (25:02):
Is this like the security deposit
on an apartment?
ed-barton_1_12-10-2024_16024 (25:05):
It kind of is.
And they've got this thingcalled a basket where they may
go, you know, it's got to exceed500, 000.
And if it does, and we'll startdealing with it because they
know it's going to be a littlebit of a urination contest
between, you know, I agree, Idon't agree.
Um, in the case of that, uh,that you're talking about, which
I was involved in.
There was no rep and warrant onthe tech stack.
(25:27):
Um, the, and it had brought in athird party consultant.
Um, and so as a result, theissue was then between a private
equity firm and a third partyconsultant, not between the
private equity firm and theseller.
emily-sander_1_12-10-2024_16 (25:39):
Ah
ed-barton_1_12-10-2024_ (25:40):
repped, repped or warranted as far as
that.
So it then fell to the portfoliocompany, IEU and I, and several
others to get that fixed youknow, what would have been a,
no, this is all good andeverything's great.
And here's the SOC report andall the other good stuff on the
tech stack.
And then it fails, then it couldbe on the seller.
emily-sander_1_12-10-2024_ (26:02):
what happens ed or rory if i'm going
to say hypothetically but we mayor may not have been involved in
this too where a founder wouldIntentionally steer the due
diligence folks away fromcertain information or just flat
out lie.
Like what if someonehypothetically just like flat
out lies about the state oftheir tech or company or
(26:23):
whatever.
squadcaster-adea_1_12-10 (26:25):
That's a, that's a, that's not a good
method to take.
Um, uh, I think that on theextreme side, you know, it could
lead to downstream litigationand, you know, other punitive
ways of compensating for thoselies and omissions.
Um, At the very least, it erodestrust completely, um, I'd say.
(26:50):
And trust is such a big part ofbusiness and life.
And especially in these dealswhere you're talking about large
sums of money.
So, um, it happens though.
Um, I think some people.
Have a hard time walking thatblurred line between, know,
overselling your business withmaybe not evil intentions versus
out and out lying.
(27:11):
I do think that some of thosethings happen without ill
intent, rather just saying, Hey,I'm, I'm highlighting the good,
right?
So, but what happens, you know,many things could happen, not
the least of which is.
a deal falling apart or, youknow, a purchase price being
reduced, um, to account forwhatever that is, plus some
(27:32):
punitive retrade because, um,you know, and then we're, we'll
certainly travel about thatbusiness and that.
Founder or whomever it is, know,you might have a real hard time
marketing your business oryourself as part of that
business in the future if youtake that tax, so definitely not
wise.
emily-sander_1_12-10-2024 (27:50):
Okay, any other warning stories or
just hey, here's how to makethis process
squadcaster-adea_1_12-10- (27:56):
Yeah,
emily-sander_1_12-10-2024_16 (27:57):
as less, you know, as painless as
possible.
squadcaster-adea_1_12-10- (28:02):
yeah, I'd like to say it always starts
kind of before you go down thepath.
And I think what I like to callgood corporate hygiene is
something to focus on, you know,you know, you're going to be
sharing deep information withqualified parties.
So make sure the information youend up sharing is.
really well organized, tells theright story in a truthful way.
(28:25):
Um, and you know, you, you, youdon't leave any stone really
unturned because time can killdeals.
So the faster you move throughyour diligence process, the more
likely are to get a good dealdone.
Um, let alone at the purchaseprice that may have been coming
through at the letter of intentlevel, which is always kind of a
headline price.
(28:46):
Um, so just prepare ahead ofyou, if you can, I like to
suggest that companies set up adata room well in advance,
populate that thing and continueto evolve it as information
becomes more, um, updated.
So as you grow your client base,as you add new contracts, as
your financials evolve, justhave a habit of keeping a data
room populated.
So when the time comes, you'renot scrambling to put it all
(29:08):
together in short order,probably missing some things,
um, not giving, Proper level ofscrutiny to it.
And then just start off on theright foot, you know, um, make
it easy for the suitors to lookat your information and have
conversation with you about it.
You know, make disclosures, uh,you know, that are reasonable.
So people like they're going tofind things regardless.
(29:29):
Um, and we talked about that inthe book, so you might as well
get it out there in the, in the,the way that makes sense.
Um, know, if there's questionsabout some of the things in your
business
emily-sander_1_12-10-2024_ (29:39):
What are, what are some of the core
pieces that you can and shouldput in that data room knowing
that you don't know the buyeryet, you don't know the exact
type of diligence that's goingto be conducted, but they're
always going to want to knowabout these things.
ed-barton_1_12-10-2024_16 (29:53):
Well, I was going to say there,
there's a few things that, uh,you know, start, start with the,
what would you want to know?
squadcaster-adea_1_12-10-2 (30:01):
Yes.
Great.
ed-barton_1_12-10-2024_1602 (30:02):
So, so, you know, if you were going
out to buy this business, whatwould you want to know?
emily-sander_1_12-10-2024 (30:07):
Yeah.
ed-barton_1_12-10-2024_1602 (30:08):
the second thing you need to put in
there is what don't they knowthat if they find out is going
to blow this deal up and put itin there, because if you don't,
they will find it.
And that's the fastest way.
So, you know, most of the dealsthat I've seen between private
equity and founders, they end upgoing sideways at some point.
(30:28):
Now, sometimes they pull it backtogether and other times it goes
off the rails and then you gotto change and then you get
changed out as a founder.
And that can be, you know,obviously a very distressing
experience.
The fastest way to get yourselffired from your own company, if
it's private equity sold, is tonot be forthcoming in diligence.
And because now you've destroyedthe trust that you theoretically
(30:50):
were supposed to be buildingover the course of that
diligence period.
That's something that they arelooking for.
Is this, is this managementteam, a management team we can
trust, that we can work with?
We're about to invest tens ofmillions or hundreds of millions
of dollars of our limitedpartner's capital.
Can we trust these folks to begood stewards of that capital?
And so, number one is putanything in there that you would
(31:11):
want to know.
So, financial statements.
squadcaster-adea_1_12-10-2 (31:13):
Yep.
ed-barton_1_12-10-2024_160 (31:14):
any, you know, disclosures around
lawsuits or, you know, andpeople issues and any of those
things that are, you know, somerisk factors and opportunities
as well.
So it's not all negative, but,um, and then anything that, if
it's going to blow the deal up,if it gets found out later, get
it out on the table.
Actually, you should be talkingto the investment banker about
that before the deal goes tomarket on how best to position
(31:35):
it because they can use it as abuy, as a buying opportunity.
So our tech stack is terrible.
Okay, fine.
This is a great opportunity tofind a strategic buyer or a
private equity firm that mayhave somebody in their portfolio
where that becomes a competitiveadvantage to them in the deal
space.
And then the, the investmentbank can position you in a way
(31:56):
that, you know, they turn anegative into a positive or at
least a neutral
squadcaster-adea_1_12-10-2 (32:00):
Yep.
Exactly.
emily-sander_1_12-10-2024_1 (32:02):
And I think a good guideline for
people is just, they will findeverything.
It's just a matter of when.
And so like you need to bestrategic about when you
disclose that because they willfind.
Everything.
And so you want that to be allup front and like Ed and Rory
were just mentioning, you mightthink this is the worst thing in
the world.
Like, Oh, Oh shit.
(32:22):
Like this, I can't tell themthis.
They might go, Oh, I can flipthat into an advantage or like,
Oh, we've seen that before.
That's not that bad.
That's just an opportunity wecan have to create an
efficiency.
squadcaster-adea_1_ (32:34):
Information is power both ways in a way.
Like you, you, you share moreinformation to help them
understand your business more.
It's possible that in theirinitial look at your business,
they're missing someopportunities that you might be
able to articulate with what youshare.
Yeah.
You couple that with havingmultiple players at the table
that have maybe, you know,slightly different, uh,
perspectives on what they wantto do with your business.
(32:55):
Once they acquire it, could turninto higher valuation for you.
Again, don't hold back because,know, you know, you get a
diligence request list and itonly has certain things on it.
If you have things thataccentuate your business in a
favorable yet truthful way, thatis the quickest way to convince
somebody that they, need to payhigher value for your business
(33:16):
if you can articulate with dataand information for sure rather
than just pure anecdote for sure
emily-sander_1_12-10-2024 (33:22):
Yeah.
And I think what we're talkingabout here is the best way to
increase the valuation of thecompany, which is through this
process, which is thorough andcan be like overwhelming.
Sometimes it is just havingthese conversations and
establishing this foundation oftrust where just these layers
and these different stories thatyou're able to tell.
And you have these conversationslike, yep, we did this by duct
(33:43):
tape and yarn because that'swhat we had.
And so this is what it is today.
Yeah.
Given funding, we can make thisbetter.
So I think telling those storiesall throughout the process and
just developing that rapport is,is where it goes well,
ed-barton_1_12-10-2024_160 (33:55):
hmm.
emily-sander_1_12-10-2 (33:55):
anything else either of you would add of,
you know, here's a smooth duediligence process, or here's how
you really optimize thisprocess.
ed-barton_1_12-10-2024_160249 (34:05):
I think one of the biggest, one of
the biggest things is, and wetalked about this in one of the
prior episodes, is have yourteam assembled ahead.
Work with the investment banker.
They've been through, they dothis for a living, right?
So you can work through, um,the, they'll talk you through,
walk you through what's going toget looked at, where the major
(34:26):
issues are.
Treat them as kind of yourtrusted advisor, because they
are, they need to be.
And it all out there and helpthem.
Help them understand yourbusiness better so they can help
you position the business betterand get you through diligence.
I can't, um, I can't stressenough that having that team put
together, your attorneys, youraccountants, your, and most of
(34:46):
all, your investment banker inthis particular case, and a good
one who's been through thesethings before, will be able to
help you lay out all of that andprep you, uh, for diligence so
that your data room's ready,you're, you've been kind of
wired with questions andanswers.
Um, and they know who the buyinguniverse is and they're going to
put you in a good position towin.
squadcaster-adea_1_12-10-2 (35:08):
Work with people that have done it a
lot, you know Um, even if youdon't have that resource on
staff there are a lot of outthere consultants that have done
this many times and that youknow could be minimally invasive
to your core business withoutyou know, disrupting other
people doing their corebusiness.
If you're in the early stages oryou haven't really like full on
(35:29):
went, went full speed ahead.
So, you know, just like you havelawyers and accountants and so
forth as kind of external, youknow, consultancy work with, or
parties you work with, know,folks that have worked in Corp
dev and, you know, runbusinesses that have been
acquired, bought and sold, youknow, they can add a lot of
value on a fractional orconsultancy basis.
emily-sander_1_12-10-2024 (35:50):
Yeah, and I think just know that as a
founder, you're a genius in whatyou do.
Like you've built this companyand it's okay if you don't know
how to do these other things,but other people are experts,
experts in these areas.
And so you want to partner withthem and assemble a team so they
can help you in those ways.
And if you're like, Again, ifyou're like, I don't know
investment bank from like my ATMmachine or whatnot, we have
(36:14):
resources that can help you.
So we'll drop those in the shownotes for a list of reputable
investment banks and differentfinancial advisors that you can
work with.
And you can always check out ournew resources at private equity
experience.
com.
But now, you know about duediligence, a very important part
of the process.
So thanks, Ed.
Thanks, Rory.
Catch you next time.
squadcaster-adea_1_12-10- (36:34):
Thank you.
ed-barton_1_12-10-2024_16 (36:35):
Thank you.
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