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China PE Due Diligence Best Practice: The Human Factor
On May 1, 2013
This is the fifth and final article in our series on how the most effective private equity firms approach due diligence in China.
1. Independent due diligence
Hire due diligence providers who give you a truly independent opinion of the Target, providers who deploy due diligence professionals who can stand up to and resist attempts to limit/influence the scope or findings of the due diligence.
2. Avoid Groupthink / Encourage independent thinking
Encourage intellectual honesty within your investment team. Reward independent thinking and constructive questioning of deal logic. Assign investment team members who are not working on the deal in question the role of Devil’s advocate.
3. Minimize due diligence failures in the data room / on-site
Due diligence often fails due to poor execution in the data room / on-site. Make sure that your investment professionals know that they should never let anyone push them around or obstruct them from doing their job during the due diligence, including what to do when this happens.
Read the other posts in our series how the most effective private equity firms approach due diligence in China:
- China PE Due Diligence ‘Best Practice’: Due Diligence The Big Picture
- China PE Due Diligence Best Practice: Strategy
- China PE Due Diligence ‘Best Practice’: Strategic Due Diligence
- China PE Due Diligence ‘Best Practice’: Strategic Due Diligence Execution
Our ViewOur team-members' views and reflections on China-related mergers and acquisitions (M&A) – including inbound foreign investment and outbound Chinese M&A – and other China-related business issues.