Timeframe for Due Diligence

This topic contains 4 replies, has 5 voices, and was last updated by  Thant Coleman 4 months, 3 weeks ago.

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  • #68254

    Tobias Rohrbach
    Participant

    How long is your experience of a timeframe for a due diligence for midmarket companies? What is the maximum effort they are able to invest besides the daily business?

    #73239

    Marcelo Lopes Abud
    Participant

    Hi Tobias,

    Here are my thoughts about it:

    In Brazil, middle market companies usually don`t have a good quality internal controls and accounting, also they sometimes have a very delayed period reporting, which in some cases are around 3-4 months delay.
    Middle market companies dont have a big staff to run those deals (at all), and also dont a skilled team to work on it also. All those problems togheter really difficult success of the deal, because uncertainty is to big and sometimes running into those business is like running into black boxes.
    Based on what i saw around here (brazilian middle market), deals and due diligence lasts an average of 1 year or more.

    #74583

    Seun Yakub
    Participant

    Hi Tobias,

    I think the amount of due diligence conducted will usually depend on the kind of the deal that is being done.
    For example, buying out a JV partner that you’ve worked with for years will require less due diligence than buying a shareholding into a new company you’ve never dealt with before, in a different country.

    Speaking from a corporate development and not an investment banking perspective, using the above cases, the JV transaction may need one or two months of due dilligence while the other case could possibly take about 6-8 months worth of due diligence.

    What do you think?

    Best,

    Seun

    #103842

    Corynne Pierce
    Participant

    In my experience it has been anywhere from 3-9 months. Ideally the more time you spend on due diligence, the more likely you are to be successful. A rushed Due diligence can result in a lot of surprises later.

    #104314

    Thant Coleman
    Participant

    Depends upon the of the Target and the scope of the due diligence. Middle Market- 1Bil and public poses an entirely different scenario than 200M and private. I’ve seen a couple months and I’ve seen close to a year.

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