“More than 90% of respondents expect financial due diligence to directly influence the terms and conditions of M&A transactions during the next 12 months.”

Private equity practitioners expect a significant increase in deal flow over the next 12 months, along with heightened valuation concerns and more rigorous due diligence procedures, according to a new study released today by mergermarket in association with Houlihan Lokey.

After a protracted flat period, private equity deal flow is gaining momentum but buyers and lenders are approaching new opportunities with caution, the study found. Based on a series of interviews with private equity practitioners in North America, the study infers a significant increase in private equity transaction volume but increasingly favorable conditions for sellers.

Increased scrutiny from lenders, valuation gaps, and time-consuming credit negotiation processes emerge as just some of the many challenges facing private equity firms during due diligence this year. Under these conditions, respondents say industry expertise and responsiveness to deadlines will be critical to their selection of a due diligence provider, even more so than cost.

To download Private Equity M&A and Due Diligence Outlook, click here (980KB PDF file, opens in a new window).