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Fine-tuning Your Due Diligence Playbook
Introduction
Moderator:
Mary Kathleen Flynn
senior editor/video producer
The Deal LLC
Bob Profusek
partner
Jones Day
Deborah Farrington
founder and
co-chairman
StarVest Partners LP
Steve Deedy
managing director/
co-leader of enterprise
improvement practice
AlixPartners LLP
Pamela Ragon
senior vice president
Allegiance Capital Corp.
Due diligence
post-financial crisis:
What has changed?
Regulatory changes that have impacted due
diligence for dealmaking
Leave no stone uncovered -- the
multipronged approach to due diligence:
• Accounting and legal
• Market and supply chain studies
• Intellectual property, licenses and
agreements
• Customer contact
• Employment issues
What are the consequences
of lengthening the period
for due diligence?
Evolution of evaluating the
operations, market and
strategy as well as
systems and organization
side of a prospective
business during due
diligence
AUDIENCE POLL QUESTION
What is the most difficult aspect of the due diligence
process?
A) Review and authenticate results of foreign
operations
B) Review intellectual property and patent
portfolio
C) Gain a firm understanding of the target’s
relationships with its partners and vendors
D) Lack of cooperation from target company
Due diligence in
public vs. private
companies: Is
there a big
difference?
Private equity approach to
risk mitigation
DUE DILIGENCE IN VC INVESTING AND EXITS
In 2010, VCs invested approximately $22B into 2,749
companies.
Among funded companies,
it is estimated that:
40% fail
40% return moderate amounts of capital
And <20% produce high returns
Source: National Venture Capital Association
DUE DILIGENCE CRITICAL IN EXPANSION
STAGE OF VC-BACKED COMPANIES
Due diligence should not just confirm your beliefs
Be skeptical of your investment reasons
Due diligence is critical part of risk mitigation
Due diligence should guide growth strategies, competitive
positioning and exit planning
AUDIENCE POLL QUESTION #2
How large is your typical internal M&A
due diligence team?
A) More than 20
B) Between 11 and 20
C) Between 5 and 10
D) Less than 5 people
E) The team size vary from deal to
deal
The evolution of due diligence teams: Size,
functions and role
Near-term outlook of due
diligence: Will it help or
hinder dealmaking?
AUDIENCE Q&A
Upcoming Webcast
Brought to you by The Deal LLC and Merrill
DataSite, The Deal editor at large Matt Miller
moderates this complimentary event “Deal
Estate: Analyzing the Pulse of a
Changing Commercial Real Estate
Market” on Thursday, Sept. 22 at 2 p.m.
EST.
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