There was a record one trillion dollars of U.S. private equity deals last year and two trillion globally. Deal sizes are up, multiples are up and funds are growing. Competition for deals is fierce, putting pressure on private equity firms to bid higher to win, and to then drive an ROI on that higher price. As a result, partners are increasingly leaning hard on the commercial optimization lever, starting with the diligence process.
Private equity firms are increasingly using the diligence process to evaluate the key gaps in an acquisition’s go-to-market model, their top-line potential and the best way to help management achieve it. When done correctly, commercial diligence allows private equity firms to enter the VCP process with management clearly focused on the right go-to-market solutions to accelerate growth.
In the following video, William Alton, private equity program manager, and Marc Metzner, vice president of Alexander Group, discuss the rising importance of commercial diligence and the best practices for doing it right. They also address how management teams can best use the output to address crucial growth constraints immediately after investment.
For more information on Alexander Group’s Private Equity Insiders Council, commercial diligence insights or sector-specific go-to-market insights and services, please contact a Private Equity practice lead.