Jump-Starting Private Equity Value Creation: The Crucial Role of Pre-Acquisition Due Diligence and the First 100 Day Plan

Marc Patterson
4 min readAug 21, 2023

MACRO INVESTMENT MARKET CHALLENGES A HEADWIND FOR PRIVATE EQUITY VALUATIONS

Private Equity Sponsors are facing their most challenging valuation market since the great recession of 2008–09. Heightened inflation and interest rates will continue to be valuation headwinds. A recent article from The Economist detailed some of the challenges to private equity sponsors in this next cycle.

As detailed in the article: “During the past decade, rising valuations for portfolio companies, and cheap financing with which to buy them, boosted returns and reeled in cash at an astonishing clip. Improving the efficiency of a firm, by contrast, contributed less to returns. The [PE] industry that emerges from this period will be a different beast from the all-consuming giant of the 2010s. The new phase will favour owners willing to roll up their sleeves and improve operations at the companies they have bought.”

A NEW AND CHALLENGING ENVIRONMENT CALLS FOR A STRATEGY UPGRADE

In this next cycle, success will depend upon the Sponsor’s ability to drive multiple expansion at the portco-level. However, with increasing inflation a looming and continued threat, time is not necessarily on their side. Value creation will need to get off to a quick start, which means that pre-transaction diligence and a 100-day plan are more crucial than ever.

Due in large part to these challenges, private equity firms have begun to put greater emphasis on the stages of pre-acquisition due diligence and the initial 100 days post-acquisition. These phases are pivotal in assessing deals, making sound investments, and accelerating value creation.

However, most small and midsize private equity funds run lean with respect to staffing due to budgetary constraints. Many simply do not have the internal resources available to handle these crucial functions alone. In order to achieve success at the portco-level, many funds are increasingly going to need outsourced help.

This article will delve into how operating partners are shifting focus to these stages and how E78 Partners provides invaluable support during this critical…

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Marc Patterson

Founder and Managing Director at Bennu Partners (BennuPartners.com) - Solutions platform for Growth-Stage companies seeking institutional capital.