Providing an initial due diligence list is often a great way to initiate transaction-related dialogue with a CEO or management team interested in exploring a capital raise or sale of the business. Typically, a due diligence list will evolve and expand as interest in a transaction grows, but it can be intimidating if the initial list provided is too thorough. Collecting a large amount of company data and presenting it in a shareable format takes considerable effort, which makes a short diligence list a helpful introduction in the absence of an investment banker leading the transaction.
When a transaction is being represented by an investment bank, it is less likely that the private equity firm will need to draft the initial due diligence list. It is more likely that interested parties will be invited to review a data room that has already been populated with the required information. Data room quality can vary from one transaction to the next, and in some instances, it will be necessary to follow up with additional requests. Information requested by any potential bidder, will be shared via the data room so that all interested parties will have access. In either scenario, whether the opportunity is represented by an investment banker or not, it is important to know what information should be reviewed.
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