Need: Due Diligence

In the Know: Proactive Due Diligence Practices

November 19, 2022 Delaney Walker

As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, Keenan Kolinsky, BluWave Consulting Manager, shares some of the proactive due diligence practices we see PE firms take that separate the more innovative private equity firms from the others. Learn more by watching the video below.

Interested in connecting with PE-grade specialized due diligence providers for your next need? Contact us here to quickly get connected to the ones you need.

Video transcript:

Due diligence is a critical piece in the private equity deal cycle, and we equip hundreds of leading private equity firms with the right PE-grade diligence providers they need – and when they need them. Performing thousands of projects every year, we gain a unique perspective to some of the more proactive and innovative approaches to the diligence process, and I want to share two such approaches we’ve seen that are separating some of the more proactive private equity firms from the others.

Number one, using the right diligence providers for the right deals. Many private equity firms have a go-to list of commercial, IT, and operations diligence providers they leverage for nearly every deal. However, each deal’s different and may require a different slate of providers to get the most out of each unique diligence phase, or diligence stream, depending on a variety of factors such as the target’s industry, the deal size, target technology or operational nuances, timing, and more. Many of our proactive private equity clients realize these nuances, and we support them by connecting them with the diligence providers whose functional capabilities, expertise, and experience account for these factors – uniquely positioning them to deliver excellence on that deal. This allows private equity firms to gain better insights with more speed and certainty, which, in turn, optimizes the entire diligence process for the respective deal. In private equity, one size does not fit all.

Number two, expanding the functional breadth and depth of diligence. Times are changing, and it’s more important than ever to get diligence right and to gain the necessary actionable insights, not only to make a more informed investment decision, but also to begin equipping the value creation plan. Especially in today’s market, value creation doesn’t and can’t end with only commercial, technology, and operational levers.As such, many of our proactive private equity clients are institutionalizing increasingly common diligence streams such as HR, digital, data, and ESG diligence to inform both investment decisions and value creation plans. We continuously map the market for PE-grade diligence providers across various functional areas, industries, price points and more so that you don’t have to.

If you or your teams are using the same slate of diligence providers for every deal, it may be time for a refresh. As you start to consider your slate of diligence providers for your next deal, give us a shout at info@bluwave.net and let us connect you with the right diligence providers for the right deal.

Quality of earnings provider needed for healthcare target

On-site quality of earnings provider needed immediately

A PE firm associate came to us with a critical need for a provider to perform quality of earnings diligence on a target healthcare company. With their go-to providers booked up, they urgently needed a provider with capacity to quickly assess the company’s YTD financial and operating information since the business had recently transformed. Not only did the firm need an immediately available provider, but they were also looking for a provider that could work onsite and that had knowledge of the medical and insurance billing industry.

BluWave has exact-fit provider in network with healthcare background

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade quality of earnings diligence needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of QofE providers that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with the select pre-vetted quality of earnings diligence providers from our invitation-only Intelligent Network that fit their exacting needs.

Firm engaged provider to move forward with the deal

Within less than 24 hours of the initial scoping call, the PE firm was introduced to an exact-fit, PE-grade quality of earnings provider that was immediately available and specialized in the healthcare industry. The client engaged this provider to begin the following week and the firm was able to confidently assess the target’s financial operations and EBIDTA evaluation thanks to their help.

Environmental diligence critically needed for target

Evaluating target company, firm needs environmental diligence provider

A PE firm managing director came to us with a critical need for an environmental diligence provider to assess a target company they had in the manufacturing sector. Having recently signed an LOI, the firm had 60 days to quickly perform extensive diligence on all areas of the aluminum manufacturing company. Given the company’s industry, the firm was specifically interested in performing an environmental assessment and discovering what the findings were. The company had multiple locations, so the firm came to us in urgent need of a PE-grade provider that could conduct diligence across multiple states and that also had experience with this subsect of the manufacturing industry.

BluWave identifies pre-vetted environmental diligence providers from network exact-fit for need

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade environmental needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of environmental diligence providers that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with the select pre-vetted providers from our invitation-only Intelligent Network that fit their exacting needs.

Firm engages exact-fit provider to conduct diligence

Within 24 hours of the initial scoping call, the PE firm was introduced to an exact-fit environmental diligence provider that specialized in environmental inspections in the manufacturing industry. The PE firm engaged the provider and was able to successfully complete their environmental assessment within their timeframe, allowing them to move forward with the deal with a full understanding of the environmental standing of the company.

Q3 2022 BluWave Insights

October 18, 2022 Delaney Walker

Every quarter our team analyzes the projects we work on with our 500+ PE firm clients to get a birdseye view of the market. We recently compiled our Q3 findings into our Q3 2022 BluWave Insights Report. Request your copy.

Key findings from Q3 ’22 include:

  • Value creation activity has increased 11% YoY.
  • Human capital remains PE’s primary area of focus at 36% of all Q3 activity.
  • Technology activity has changed 86% YoY.
  • Sales & marketing activity has changed 29% YoY.

Learn more about the insights we gleaned from Q3:

We can support your value creation needs, human capital needs, technology needs, sales & marketing needs, and more.

Video transcript:

BluWave serves a trusted role with more than 500 of the world’s leading private equity firms and thousands of proactive businesses by connecting them with the best-in-class third parties to help build value with speed and certainty. From our unique vantage in the private equity landscape, we’re able to glean insights into how and why the best business builders in the world are assessing opportunities and building value in their portfolio companies. Here are some of the top takeaways from the BluWave Activity Index during Q3 2022.

First and foremost, value creation remains key in private equity. Despite the unsteady economic landscape, PE firms are equipping their portfolio companies with resources to maintain the momentum of previous value creation efforts. The BluWave Value Creation Index shows a more than 11% increase in Q3 value creation activity year over year. It is evident that PE firms are running towards the storm, treating economic uncertainty as an opportunity rather than a setback.

Number two, technology is surging as digitization continues to be embedded in the post-COVID world. Private equity firms are equipping portfolio companies with data and analytics capabilities to enable data-driven decision making and workflow automation. We’ve seen technology activity rise from 8% of all activity in Q3 2021 to 15% of all PE activity in this past quarter, and we expect to see technology activity remain high as firms continue to invest in subscription-based software companies due to their stability during volatile economic times.

Lastly, human capital remains private equity’s primary area of focus accounting for 36% of all activity in the BluWave Activity Index for Q3 2022. Firms continue to take strides to ensure the teams in their portfolios are top notch and well-equipped for success. This quarter we saw a surge of PE firms bringing in “wartime generals” with specialized skillsets equipped for the “new now” that can help guide portfolio companies to success in the current economic environment.

It is our hope that the information in the Q3 BluWave Insights Report will give you incremental edge as you build the best businesses in the world. If you’d like to learn more and get the report, please contact any member of the BluWave team or follow the link below. Onward.

Top specialized diligence providers critically needed

Firm needs specialized providers across their diligence provider matrix to assess target

A PE firm investment team came to us with a critical need for a full set of industry specialized diligence providers that could assess their target in the commercial roofing space. Having recently received the deal under LOI, the firm was preparing a full diligence analysis on all aspects of the business. The team had a sense for the typical providers they used, but knowing the value of using specialized providers on a deal-by-deal basis, they wanted BluWave’s recommendation for providers that were the best in class for the specific industry and needs of the target. Specifically, the firm needed specialized market study, operational, and IT diligence providers. 

BluWave uses extensive knowledge and network to identify industry specific, PE-grade providers

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade diligence needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of the providers across all service functions that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with the select pre-vetted operational, IT, and market study providers from our invitation-only Intelligent Network that fit their exacting needs. 

Firm engages select providers to confidently assess target 

Within less than 24 hours of the initial scoping call, the PE firm was introduced to select, exact-fit, PE-grade IT, market study, and operational diligence groups with extensive experience in commercial roofing. The client selected their ideal choice for each service and the PE firm was able to confidently assess the target company during their period of LOI. So pleased with BluWave’s quick insight and introductions to providers that were best-fit for each diligence need, the firm made it standard operating procedure to bring all of their diligence needs to BluWave moving forward. They knew this would ensure they would always connect with the best, PE-grade, specialized providers for any given need. 

In the Know: Due Diligence for Better Deals

October 6, 2022 Delaney Walker

As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients in our “In the Know” series. In our most recent installment, Consulting Manager, Scott Bellinger, covers due diligence for better deals – sharing the top due diligence resources we equip clients with and why firms come to us with their needs.

Learn more about how we equip PE firms with the exact-fit commercial due diligence,  IT diligence, and operational diligence providers they need exactly when they need them.

Interested in learning more about how we can support your diligence needs? Learn more in our Due Diligence hub.

Video transcript:

In the past few weeks, The BluWave Activity Index has shown that due diligence activity is picking up as we quickly approach Q4. Heightened deal activity means that it’s more vital than ever to ensure you’re utilizing diligence providers that can equip you with the unique insights you need to inform a wise investment decision. We quickly connect PE firms to specialized diligence providers that they need so that they don’t have to waste time vetting providers by availability, budget, and industry expertise. Here are some of the top diligence resources we are connecting our PE firm clients with.

First, commercial due diligence. Commercial diligence has become standard operating procedure for all of private equity, not just the large cap firms. With deal stakes high, investing in commercial due diligence upfront is vital. To maximize the output of commercial due diligence efforts. We connect firms with specialized providers by industry who already know the market. This allows them to dig in deeper, faster, and equip them with market and company insights generalist providers are not capable of.

Next is IT due diligence. Nowadays, every business has cybersecurity concerns. An unknown, as well as unaddressed cyber risk, can wreak havoc on an investment down the road. Proactive PE firms of all sizes are choosing to invest in IT due diligence efforts upfront so that they can preemptively address problems and challenges that could occur in the future. As the technology landscape constantly changes, so do the diligence providers in the space. In order to combat this for our clients, BluWave continuously maps the market in order to always be on the forefront of knowing what providers are best suited for what PE firms need at any given time.

And finally, operational diligence. Gone are the days where small process improvements in a portfolio company led to high returns. Now it is all about transformation. Ops due diligence providers go into a target company during the LOI phase to review their processes and begin identifying opportunities for growth so that you can hit the ground running on a well-developed value creation plan immediately post-close. We connect our clients with industry-specific providers they need so that they can gain the nuanced insight that can transform a company only industry veterans would glean. At BluWave, we are here to connect you with exact-fit, PE-grade diligence resources you need at the exact time you need them. If we can provide you with the resources you need to bolster your due diligence process, or if we can support any other third-party needs that you may have. Contact us at info@BluWave.net.

Technology diligence critical for target company

Partner needs technology diligence for software target 

A PE firm partner came to us with a critical need for a technology diligence group that could assess a target software company. Hoping to close on the target company soon, the partner needed to evaluate the quality of the code, the transportability of the software, and the scalability of the software. They urgently needed a PE-grade technology diligence provider who could assess the company’s current software and advise a best practice plan for how the firm should move forward with the target.

BluWave has select providers that match exacting needs 

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade technology diligence needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of providers that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with the select pre-vetted providers from our invitation-only Intelligent Network that fit their exacting needs.

PE firm engaged their ideal provider to move forward with diligence efforts 

Within 24 hours of the initial scoping call, the PE firm was introduced to two PE-grade tech diligence providers that specialized in the software industry. The client selected their ideal provider, and the PE firm was able to confidently evaluate the company’s software and its ability to scale. The technology diligence group not only evaluated the current software but was also equipped to provide the firm with recommendations for how to move forward.

Pre-close recruiters immediately needed

PE firm has critical need for pre-close recruiters for a target company

An investment executive at a large cap PE firm came to us with a critical need to source trainers and university recruiters for a target company in the engineering industry. Prior to closing on the target company, the PE firm wanted to explore the available selection of talent they would have if the deal closed, and they chose to expand the UK-based company into the USA market. The investment executive urgently needed a PE-grade pre-close recruiter who could source the trainer and university recruiter candidates – both of which required a unique skill set and background.

BluWave has in-network, PE-grade recruiters with industry experience

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade pre-close recruiter needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of non-executive recruiters that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria. Then we connected the client with the select pre-vetted recruiters from our invitation-only Business Builder’s Network that fit their exacting needs.

The firm was equipped with the proper talent sources to proceed with their deal

Within less than 24 hours of the initial scoping call, the PE firm was introduced to a PE-grade non-executive recruiter that specialized in sourcing trainers and university recruiters for engineering technology roles. The client selected the presented provider and was able to confidently and quickly move forward in their diligence process, equipped with the necessary insight on the available talent they would need to drive value post-close.

Instant solution for specific IT due diligence need

PE firm needs IT due diligence provider to assess target company

A managing director came to us with a critical need for an IT due diligence provider to assess a target company in the manufacturing industry. The portfolio company was a multi-site signage company focused on design, project management, and manufacturing. The managing director needed a provider located in the southeast who could assess scalability and risk with industry-specific technology while also having excelled in prior work with PE firms.

BluWave identifies IT diligence provider with specific manufacturing knowledge

Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade IT diligence needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of IT diligence providers that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria, and then connected the client with the select pre-vetted service provider from our invitation-only Intelligent Network that fit their exacting needs.

Firm uses diligence provider to properly evaluate target company

Within less than 24 hours of the initial scoping call, the PE firm was introduced to the exact fit, PE-grade diligence provider that specialized in assessing manufacturing-related technology. The client engaged the provider we presented them with and was able to confidently evaluate the target company and gain the insights they needed.