Commercial Due Diligence

Hi there,

I think this is an interesting question that may be relevant for many people. I would be happy to share my thoughts on it:

• First of all, I would highly advise you to re-assess if this switch to a private equity practice is a personal career goal or if it was influenced by external factors. It's essential to have a clear understanding of your motivation for the switch.
• When it comes to resources, the websites of your target companies are a good starting point. Look into the descriptions of their private equity practice, case studies, and any other related information they may have available. Additionally, reach out to current or former employees of the respective companies to get their perspective.
• Remember, you were invited for an interview, which means the companies see potential in you for their private equity practice.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews in private equity consulting, please don't hesitate to contact me directly.

Best,

Hagen

Hi there, 

There's lots of educational material that you can find online, but the best way would be to learn it through practice. 

You have the advantage of already being with a consulting firm, so try approaching them with this specific interest and ask whether you could join any sort of DD-type project in the coming period. This will give you a taste of how it actually is to work on this sort of project but also a crash course into what is expected from it. 

Best,

Cristian

In a CDD, you will be supporting an investor decision on whether to buy or not a company, usually by providing an assessment on the market that will be translated into the investment business plan (i.e., help provide specific lines on the business plan usually related to growth, segmentation, margin targets, etc.) also providing supporting evidence (research, expert interviews) and qualitative support.

The objective may not only be to assess the market where the company currently is, but actually to support the investment thesis (e.g. can they successfully expand to segment X, or market Y?) and assess key market risks (how much market share is at risk if xyz happens?).

You may also be working to calculate potential synergies (and one again, try to find evidence to support any assumptions made in the business model).

The work is, in my opinion, quite exciting and intellectually challenging. You have to learn a lot about a new market very fast, and you learn a lot about business models and how value is created. 

Regarding skillset, you need a spike on analytical and structuring capability for this (and a good degree of authonomy). But client management skills don't need to be as sharp.

The downside is that projects are usually 3 week long given the time alloted in the deal process by the sellers. So you need to be super fast on everything. Is very very intensive, with long hours and a lot of crunch time, and you work from the office. So these are the 4 differences vs. regular “strategy” project work: longer hours, short project, no travelling, limited client interaction.

Hi,

Firstly, congrats on getting the interviews. Based on what you described in your question and also through your comments, I would suggest the following and explain my rationale:

1) Read up/network enough to understand the basics of CDD and what it is like working in a ringfence

• You will never be able to talk about it in depth, and you will never be able to ‘make up’ experience on your CV because you have never done CDDs and your firm does not do CDD as well
  • If its obvious from your CV that you are not an expert in CDD, the firms will not expect you to be one
  • They will however expect you to demonstrate motivation/interest and capability
• Thus, what you can do to help with your motivation/interest is to research/network and talk to people in PE ringfences to develop your own POV on why you want to work in a PE ringfence despite the challenging reputation that it typically has within firms
• There are quite a few online resources already linked by the coaches, and you can google for others. However leaked CDD decks are alot harder to come by vs VC pitch decks
• I would strongly suggest networking and speaking to consultants who have spent time in ringfences to understand the practice better and help develop your story better

2) Focus on your core interview skills

• The fact that you have already been invited to interviews means that firms think you have the underlying capabilities needed for the job
• I was part of the PE ringfence at BCG for ~2.5 years, when I was interviewing candidates, I did not give them a CDD type case interview question, and neither did many of my PL/Partner peers
• We know that candidates like you do not have a CDD background, but we expect the same (if not higher) level of problem solving standard

The above applies only if assuming you are specifically only being interviewed for the PE practices/ringfences. If it were the case that you are interviewing for an office that just ‘tends to do more CDDs than other types of cases’, then point #2 above is all the more important as you may still do non CDD cases.

Hope this is helpful and all the best for your interviews!

Hi there,

At the end of the day, there is little difference between DD case interviews and any other case interview topic.

In that sense, you should also approach it like any other problem-solving exercise in a case interview setting:

1. Learn problem-solving from a first-principles lense (disaggregating problems and understanding core drivers of a situation), supported by a hypothesis-driven mindset (helps with prioritization)
2. Learn how to interpret charts
3. Become comfortable with quant-heavy cases
4. Learn how to structure your communication

Practice DD cases with peers and skill-building drills on your own.

A good coach can expedite the process and lift your performance above a level that you would achieve on your own.

Cheers,

Florian

Hi there,

How about on the EYP/S&/MBB websites! :P

They have a ton of information on their sites. All kinds of articles, white papers, etc.

Here are some prior Q&As: https://www.preplounge.com/en/consulting-forum/what-are-the-differences-between-cdd-and-vdd-with-regards-to-due-diligence-12397

https://www.preplounge.com/en/consulting-forum/commercial-due-diligence-3284

https://www.preplounge.com/en/consulting-forum/what-is-due-diligence-in-consulting-projects-in-what-major-ways-is-dd-different-form-other-types-of-projects-3394

Hi there,

Interesting question! That's because DD is often dreaded by consultants who avoid this like the plague, if they can. It's very short timelines, high pressure, and generally not very interesting (that's just my personal opinion based on personal experience).

If you're keen to learn more about DD, I would totally encourage you (irrespective of what I think). What I would suggest, however, is to get some first hand insights from people having worked in this area. Get in touch with current/former consultants to see what both theory and practice are like.

Best of luck!

Moritz

Hi there,

that’s an interesting approach you are taking. I would recommend doing at least a due diligence project before considering switching to a firm specialized in DDs. While doing a few of these projects is certainly a good learning experience, it’s usually the type of project many people are glad to get away from 😀

Typically, CDDs are pretty standardized and each firm has their own established templates they use for e.g. market analyses (size, growth rates, trends, drivers), competitive landscape or business plan evaluation of potential targets. 

In general, DDs are more of high intensity projects with short timelines (~3 weeks). However, if you have an experienced project manager, the workload will be more manageable since a lot of the requirements are predictable and templates are available.

In terms of resources, check your current company’s intranet for CDD project documentations so you’ll get an idea.

Best of luck

Try free online lessons from coursera, udemy, CIMA and similar platforms. Youtube has some lessons too and there are paid ones available too for like $300-$500.

In addition, try to find someone to speak to from your network (Linkedin or otherwise) and get on the phone for 30mins→ this will save hours of personal research.