DESIGNING AN OPERATIONAL DUE DILIGENCE PROGRAM FOR PRIVATE EQUITY

Once an investor has gone through the goal self-assessment process, they can next approach the design of an operational due diligence program. During the goal self-assessment process an investor has likely made a number of choices that have implications for the scope and scale of the operational due diligence process. It is in this way that operational due diligence program design is closely related to process development design. Such choices will necessarily have an impact on process design.

Operational Due Diligence Scope Considerations

One example of the interaction between the results of the goal self-assessment process and operational due diligence process design, relates to resource expenditure. If an investor has very high expectations of the operational due diligence process and wants a broad net to be cast in an attempt to uncover any and all operational risks, then this same investor must also be prepared to allocate the appropriate resources in this regard. Operational due diligence resource allocation can be a bit of a tricky business. As any analyst will likely tell you, operational due diligence is one of those areas where the more work an investor does, the more there seems to be to do. Such notions can refer to the fact that when an investor reviews a partic....