Using Talmix For...Due Diligence

What’s the demand?

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Everyone knows that Due Diligence is a critical part of the dealmaking process, and although it applies in any kind of financial transaction, the primary consumers of DD services remain the Private Equity funds, where a higher level of due diligence is required because of the large levels of ownership and higher risk profile.

Ultimately Due Diligence not only appraises the likely outcome of an investment, and whether to go ahead based on that information, but it also is the safeguarding tool for those who have invested in the funds, and so is both about the upside of a potential investment, and the mitigation of any risks associated with it. The output of a Due Diligence exercise is therefore the documented evidence of the deal decision making process.

Due Diligence has also expanded in scope over time, with more stringent regulations across M&A, and with new requirements like increasing focus on ESG capabilities.

All of this means that even with the slight softening in 2023/2024 of deal making activity in Private Equity, the demand for Due Diligence expertise and implementation continues in this sector.

What’s involved?

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Traditionally due diligence has been the domain of large consulting firms who have built frameworks to address the classic 4Ps of due diligence – namely
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• People – the team involved
• Performance – historical and forecast analysis of all data and metrics
• Philosophy – how the target fits with the investment philosophy and rationale
• Process – the details of the what and the how

Although frameworks and approaches may differ the foundational elements remain aligned to these, covering the following types of due diligence:

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• Financial, including analysis and review of financial documentation, cash flow, historical performance, balance sheets, assets and liabilities
• Commercial, covering market sizing and assessment, the competitive landscape, sales strategy and performance, and the overall commercial and business plan
• People, including the organisational structure and design, leadership structure, policies and HRIS data
• Technology, including systems, infrastructure, roadmaps, technical debt
• Operational, including supply chain, facilities and infrastructure, operational workflows and systems
• In addition, there is more specialist due diligence to cover all governance and legal obligations and liabilities, IP and ownership, and tax structures and compliance.

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What skills are needed?

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• Analytical Skills, including quantitative analysis and experience in financial analyses, market sizing and forecasting
• Strategic Evaluation with ability to evaluate strategy, model, positioning and perform standard processes like SWOT, benchmarking and predictive risk assessments
• Industry Knowledge, with many funds wanting the background of particular sectors and industries to improve the outcomes of the DD process
• Market Research, the ability to run research exercises, gather data, insights and conduct interviews and assessments
• Commercial Strategy – ability to develop go to market strategies, identify growth opportunities and contribute to overall planning
• Project Management, particularly in cross cutting teams during an M&A process
• Communication skills – a vital aspect of the process is the ability to inform and clarify activities and decisions to all stakeholders
• Other soft skills include critical thinking, execution and detail and adaptability as the process is likely to require different perspectives at different stages

Why turn to Talmix?

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Although DD has been the traditional domain of the consulting firm, increasingly Companies, and in particular PE funds are recognising the value of using independent consultants for this process. Their adaptability combined with arriving with a consulting toolkit, enables a more agile approach and driving the process faster.

They are also well equipped to transition to the execution phase of a post merger integration (see separate guide) without having to rebuild a new team as in a consulting practice.

Although the brand is often the reassurance in due diligence, the knowledge that independent talent now provides is often superior to a junior consulting team and the experience enables more direct conversations and decisions with the investment teams.

Using a marketplace like Talmix for Due Diligence gives a new approach, particularly in commercial, operational and technical DD, with over 1/3 of the 60,000+ network having the background that enables them to deliver these projects, and making up a considerable portion of their independent engagements so their skills are relevant and current.

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Getting Started with Talmix

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If your investment team is looking to extend its network of available talent to run detailed and robust due diligence, with the flexibility and cost effectiveness that an independent can offer over the traditional behemoths, then you can post your requirements straight away on the Talmix marketplace. It’s a very intuitive, streamlined process where you can elaborate on the specifics to ensure a perfect match.

If you want a little more advice on scoping then you can post the project basics and our customer success team can help you draw out specific screening questions, talent types and budgets. Get started now and you could address this need faster than you’d anticipated.