CIL’s managing director Sebastian Chambers was recently quoted in the March 2010 Real Deals Europe magazine.
 
In an article tracking the increasing importance of using commercial due diligence in the investment process, Sebastian gave his thoughts on a number of topics:

Why commercial due diligence is important in the current economic environment.

“In the five years to 2007, businesses were making money and the tide lifted most companies off the bottom. The downturn has changed that. Investors need a deep understanding of the markets their target companies operate in and whether their companies are in the right niches.”

The varied requirements of a commercial due diligence house.

“If you are doing commercial due diligence on a larger market leader say British Gas, details on customer relationships would be less interesting than information on macro issues like gas prices. If you are working on a small business then customer relationships, key contracts, market share and competitors are the main areas to look into.”

The variety of services a commercial due diligence house can provide.

“The CIL team has done plenty of work for banks seeking advice on difficult lending situations, while corporates have sought outside expertise to help them make sense of their markets and assess performance. Everybody is careful with their capital and wants to make sure they’re comfortable with the external environment before deciding how to manage it.”

The ability of a commercial due diligence house to enhance a private equity firms understanding of the context a target company is operating in.

“Private equity firms will always work with us to determine the scope of what commercial due diligence will cover and what areas to research. Different houses will have different styles. It is about working together.”

The importance of demonstrating deep sector expertise to provide investors with genuine insight in to the market.

“If you are going to win work you simply have to know the sector inside out. Almost all the providers of commercial due diligence out there will have specific sector knowledge. We are often engaged to look at a business we already know very well.”

For a more in depth look at the article, see ‘Commercial Breaks’ – Real Deals Europe – 25 March 2010 – page 19.