Due Diligence: Looking Behind the Curtains
Due diligence often sounds like a formal, administrative process—a matter of ticking boxes, reviewing numbers, and searching for “skeletons in the closet.” But anyone who believes that’s all there is to it misses the true essence of the craft. A skilled due diligence expert is part detective, part psychologist, part strategist. The real art lies […]
Due Diligence: The Importance of the Most Favored Nations Clause
In an era where fund investors are increasingly critical of transparency and equality, side letters and the associated Most Favored Nations (MFN) clause play a crucial role in the private equity landscape. These supplementary agreements enable General Partners (GPs) to make tailored arrangements with specific Limited Partners (LPs). However, this can lead to preferential treatment […]
Due Diligence: ILPA Driving Force Behind Accountability in Private Equity
Whether you are investing in a Fund of Funds or a Single Fund, the Institutional Limited Partners Association (ILPA) provides crucial protection and support for you as an investor. This is essential because private equity funds often raise questions about transparency and governance. For Limited Partners (LPs), the influence they can exert on the funds […]
Due Diligence: The Limited Partners Advisory Committee Under Scrutiny
Private equity funds remain an attractive option for an ever-expanding group of investors. However, they are often insufficiently aware of the unique governance challenges that these funds present. For adequate governance, it is crucial that investors rely on the Limited Partners Advisory Committee (LPAC), which oversees the fund manager (General Partner, GP). In practice, this […]
Due Diligence: The Art of Valuation
Valuing a company isn’t as straightforward as it seems. With myriad methods available, investors can find themselves adrift in a sea of numbers. The real challenge lies in understanding how different investors approach valuation based on their unique goals. Valuation, far from an exact science, hinges on the investor’s type and strategy. Whether it’s a […]
Due Diligence: The Importance of an Investment Cycle
Our Due Diligence (DD) method is not an isolated process; it is a crucial part of a broader investment cycle. When engaging with potential clients, we do not merely inquire about the stakeholders and the existing mandate. Our primary question focuses on the investment cycle employed by the investor. We view this cycle as the […]
Due Diligence: Mapping HEMA’s Carbon Footprint
HEMA’s comprehensive approach to measuring and reporting its CO2 emissions offers valuable insights for investors conducting due diligence on corporate environmental performance. Their collaboration with the consulting firm Metabolic underscores the importance of external expertise for accurate and reliable data. This case highlights that investors should seek companies that partner with reputable experts for their […]
Due Diligence: Never Overlook Succession Planning
In the world of investment, succession planning often takes a back seat despite its profound implications. What exactly is succession planning, why is it crucial, and how does it shape investor outcomes? Understanding Succession in Investing Succession planning involves the strategic transfer of ownership, control, and management of investments, businesses, or assets to the next […]
Due Diligence: Skin in the Game
In the investment world, aligning stakeholder interests is crucial for sustainable and ethical outcomes. A key element in this alignment is “skin in the game,” where hired managers have a personal financial stake in the investments they oversee. This approach can foster better decision-making but also introduces potential conflicts that need careful management. This article […]
Due Diligence versus Vetting: Keys to Sound Investing
In today’s global investment landscape, due diligence and vetting are foundational to making informed decisions and managing risks. These concepts, originating from the Anglo-Saxon world, are now crucial for ensuring the integrity and transparency of business transactions. Due Diligence: Essence and Future Due diligence is a thorough process that precedes significant business decisions. It aims […]