“Due diligence is due for an upgrade,” Douglas Laney argued in a 2020 Forbes article.
I agree.
Risk and value are wider and more complex than the traditional definers of due diligence. The stalwarts of financial, taxation, legal and commercial due diligence (CDD) – all of which are needed – must be supplemented with more specialist assessments of company value and potential.
Hence, I was delighted to see CDD giant Bain & Company's recent acquisition of Tech Economy – a specialist consultancy which helps investors assess the underlying technology of the businesses they are looking to acquire.
Hugh MacArthur, Bain’s global head of PE, said of their rationale: It has become critical for private equity investors to understand the technological infrastructure and processes of any digitally enabled business.
Again, I couldn’t agree more, Hugh!
Technology and digital DDs are vital to progressive investors seeking value insights, as I’m sure my colleagues at onefourzero, CG Consultancy (UK) Limited & Palladium Digital (to name a few) concur.
Yet, I would add that Data Due Diligence is then the next natural step along the digitalisation value chain.
After all, data and analytics assets can materially improve company decision making, optimise/automate operations and – in some instances – generate new revenue streams.
Plus, in a world where over 80% of corporate value comprises intangibles, it’s inevitable that a significant portion of this can be attributed to a business’s data.
So, why are data assets still being overlooked in due diligence?
And what other specialist areas should be included? I’m sure Lizzie Wills would add Policy DD?
What else?
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Originally published on LinkedIn: