Many leading PE firms are increasing their focus on a fast and reliable way to gain the most value from their acquisitions through the operational side of the acquisition targets. Legal, financial and commercial due diligence assessments are already a given, but front runners are realising that there can be major value in also looking more in-depth within the target company rather than only at the theoretical market development surrounding the target.

We find that leading PEs have consequently begun to asses all accessible operational activities prior to making an offer. And our M&A experience tells us that there are basically three main reasons to carry out an operational due diligence:

  1. Increasingly competitive markets where the stakes are higher than ever means that the buyer with the fastest and most comprehensive due diligence process will win the race
  2. An operational due diligence provides critical insights into the value chain
  3. Operational improvements can make success less dependent on external factors