Private Equity & Venture Capital · the deal path
Underwrite what the model cannot see.
Commercial and operating diligence before the bid, and delivery after close, for funds investing in India, the Gulf and beyond.
The investment path
Five places an investment case is won or lost.
Most deals turn on one of them. Start at the one in front of you.
THESIS · 01 / 05
Every category arrives already sized, by the party selling it.
A category number has to be counted by someone with nothing riding on the answer.
The evidence
A category is described before it is measured, and the description travels further than the measurement. The seller's version sets the boundary, so every number inside it inherits the seller's interest. When the boundary itself is never argued, the committee ends up testing arithmetic whose shape it has already accepted.
Where we come in. We draw the boundary of the category first and count it from the bottom up, so the number holds when the committee pushes on it.
TARGET · 02 / 05
What the market will do gets researched. What this asset can do gets assumed.
The plan's assumptions have to be tested against what the business can already do.
The evidence
Diligence answers the question it was scoped to answer, and the scope is usually the market. So what comes back describes a category the asset happens to sit in, rather than the operating capability the asset would need to move inside it. The distance between those two is where the plan assumes its way forward.
Where we come in. We read the asset against operating reality rather than against the category, and name which of the plan's assumptions the business cannot currently support.
PRICE · 03 / 05
Same model. Different hands. Different answer.
A price has to be derived, not argued.
The evidence
Deals now fail on price more often than on anything diligence turns up. Not because the model is wrong, but because it rests on assumptions nobody made explicit, so two disciplined readers reach two defensible answers. What is being negotiated is not the value. It is whose assumptions stand.
Where we come in. We anchor value to demonstrated capability rather than to the seller's plan, and hand you the question to put to management before you bid.
VALUE · 04 / 05
The plan is written by the deal team, and run by everybody else.
A commitment with no name against it is not a commitment.
The evidence
A plan assembled without the people who will deliver it survives only until someone has to act on it. At close it meets a management team that was not consulted and a resource base that was described rather than moved. What was committed and what is actually staffed part company in the first weeks.
Where we come in. We build the plan with the people who own the numbers, and name who owns each commitment before the clock starts.
RETURN · 05 / 05
The view was formed at close, and never formed again.
A view that only updates on schedule is a view that updates late.
The evidence
The longer an asset is held, the further the plan drifts from the business it was written for. Reporting follows the results, so it confirms the drift rather than catching it. By the time the numbers make the case for changing the plan, the hold has already paid for the delay.
Where we come in. We keep the view current through the hold, and change it when the business proves the plan wrong rather than when the reporting cycle comes round.