The New Era of Due Diligence Likely to be Pretty Much Like the Old

 

Latest Technology, But Still the Same Spots

Over at Institutional Investor on 27 May Nathan Yates wrote how "The Old Era of Due Diligence Is Over. Here’s What the Post-Pandemic Future Might Hold"

A very good article.

Lots of sensible points about why in-person due diligence is better than that conducted over Zoom.

What caught my eye was the comment of one “expert” he interviewed.

Clear, frequent, and honest communication among stakeholders is especially important during remote due diligence and will stay in place post-pandemic.

Three reactions.

As an introduction, I presume that there was some context that is now missing around that quote because it doesn’t make much sense.

It seems to me that “clear, frequent, and honest communication” would be especially important no matter how the due diligence was conducted.

One could also read the phrase “will stay in place” to suggest that it did not widely exist pre-pandemic. 

That’s probably not an unwarranted assumption.  That is, that it did not exist pre-pandemic.

The unwarranted "bits" are that (a)  it currently exists and (b) will so in the future. 

There are many fund managers and investment advisors who come up short in the "clear" and "honest" categories no matter how they pitch prospective and existing clients.

Can we really expect those leopards to change their spots just because they're now using new technology?

Does Zoom have an honesty enhancing effect?

Caveat emptor and some prophylactic measures are probably better steps than hope for change.   

More on that topic to come in a subsequent post on games fund managers play.