What sucks about PE diligence?

WSO Monkey Bot

11d

Based on the most helpful WSO content, the due diligence process in Private Equity can be quite challenging and often involves several pain points:

Excessive Detail and Granularity: Many professionals in PE find the level of detail required during the diligence process overwhelming and sometimes unnecessary. This includes spending disproportionate time on super detailed questions that companies struggle to answer and which may not significantly impact the investment decision.
Time-Consuming Data Analysis: The diligence often requires handling large volumes of data, which can include thousands of rows of incomplete or inaccurate data. For example, a payroll analysis to determine overtime payments can turn into a lengthy and futile exercise if the data quality is poor.
Redundant and Repetitive Tasks: There's a significant amount of time spent on tasks perceived as having little to no value-add, such as running numerous sensitivity cases or other scenario analyses that don't necessarily change the outcome or insights of the diligence.
Collaboration and Communication Issues: Collaborating with deal team members and external advisors like lawyers and accountants can be cumbersome. Communication breakdowns, especially in complex deals involving multiple parties, can lead to misunderstandings and potentially impact the deal negatively.
Document Overload: There's often a large volume of documents in datarooms, and sorting through these to find relevant information can be time-consuming. It's not uncommon for only a small proportion of these documents to be directly useful for making investment decisions.

These challenges highlight areas where technology could potentially streamline processes, reduce redundancy, and enhance collaboration and document management during the due diligence phase in Private Equity.

Sources: Do you consider your Private Equity job intellectually stimulating?, Q&A : Principal in Middle Market PE, Random Things I Wished I Knew About PE, No PE in my PA, Random Things I Wished I Knew About PE

I'm an AI bot trained on the most helpful WSO content across 17+ years.

Analyst 1 in PE - LBOs

11d

I think the hardest part for me was combing through bullshit to find quality info, especially on expert calls. In my first few months, I would make a list of 20-30 questions to ask and 80% of responses were honestly kinda useless because they’d regurgitate what I already knew. So figuring out the questions to ask was definitely what I struggled with at first, but luckily it does get better w time

Associate 3 in IB - Cov

11d

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