Private Equity (PE) Investment Management Due Diligence

Management due diligence during the candidate assessment process

Benefits to the Private Equity client

  • A robust assessment of the candidate’s potential as well as attainment.

  • Objectivity around behavioural work preferences and motivation.

  • An understanding of the candidate’s likelihood of remaining in the business long enough to see through the business plan.

  • Cultural alignment between the candidate and operating company as well as the Private Equity house.

  • An assessment of potential risk.

  • Data around the potential for promotion to the next level at the right time.

A progressive Private Equity firm instructed MDC Advisory to assess a candidate for a ‘C suite’ appointment. The brief was to assess the candidate using the same process we would use in a full management due diligence process. 

For this particular scenario, the management due diligence process involved using two psychometric personality questionnaires and a measure of the candidate’s thinking style and decision-making habits, to assess their work preferences, behaviours, motivation and potential. The project also involved in-depth interviews and feedback discussions with the candidate to dig really deeply into the candidate’s likelihood in executing the investor’s value creation plan towards a successful exit in three to five years’ time.

Some three hours in all was spent with the candidate on a two on one basis along with extensive benchmarking of the data prior to presenting the client with a detailed feedback report and de-brief.

The PE client wanted to do much more than simply validate their interview process. They wanted an objective assessment by business focussed consultants who understand what it takes to succeed in business as well as the business psychology experts.

The Outcome

The Private Equity client and operating company had the confidence to make what was a high stakes decision to hire the candidate. 

The costs of a failed hire would be substantial, not just in terms of direct costs, but also opportunity costs.

 The management due diligence process helped to mitigate the risk at hiring stage.


About The Author

Matthew Davis leads MDC Advisory, a full-service business Psychology and leadership consulting practice.  

He has over 30 years’ experience of advising clients on all aspects of effective selection having advised clients globally.

He can be contacted via email or on 07974 430021


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