Diligence Matters Best Practices Briefs

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Jeff Merkle

Author: Jeff Merkle
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019

Avoiding Asymmetric Competitors in Technology Investing

By Jeff Merkle

In a recent conversation with a leading technology-focused sponsor, I was asked an interesting question: if [insert hyperscale technology company name] is getting into everything, then how do I know what’s safe? In this case, we were talking about Amazon, but the same could have applied to Microsoft, Google, Apple, Salesforce, Adobe, and more.
017

Building Habits to Reduce Due Diligence Mistakes

By Jeff Merkle

Private Equity investing has been described as a combination of art and science, calling on a wide range of disciplines to make good judgements. In that spirit, I wanted to share a few thoughts I use to test my own judgment. They all surround a central question: What am I missing?
015

Value Gen: Transitioning the Core Business

By Jeff Merkle

In search of higher multiples, investors and their advisors are increasingly pressuring companies to transition their core business to match “themes” that earn higher valuations. For instance, businesses that would rightly be described as professional services with just a hint of a technology base – such as a staffing service with a proprietary database – become “technology enabled…
014

Discovering Repeatable Growth in your Diligence

By Jeff Merkle

Over the years, I have heard multiple M&A professionals say “we don’t underwrite hopes and dreams,” by which they mean new tactics proposed, but not tested, by Management (and their bankers). What is not discussed as often are the new tactics that have been tested…but that are destined to work just once. These tactics are what we call unrepeatable growth stimulants, UGS (or just,…
012

Commercial Due Diligence and Value Generation via Network Effects

By Jeff Merkle

Many attractive investments are predicated on network effects – these are businesses that connect users, buyers, and/or suppliers. Companies like Visa, eBay, and LinkedIn have famously enjoyed the benefits of network effects to accrue immense, highly durable value. Outside of software, businesses such as recruiting, retailing, media, health provider networks, and many others, enjoy network…

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