January 18, 2016
Interviewed by: Privcap
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Carve-out Complexities: The Project Manager

RSM’s Dave Noonan explains one area of focus in his firm’s Rough Order of Magnitude due diligence service, designed to help private equity clients quickly predict the costs of a carve-out transaction during the critical pre-deal phase.

RSM’s Dave Noonan explains one area of focus in his firm’s Rough Order of Magnitude due diligence service, designed to help private equity clients quickly predict the costs of a carve-out transaction during the critical pre-deal phase.

Carve-out Complexities: The Project Manager
With Dave Noonan of RSM

In a carve-out transaction, how is important is project leadership?

Dave Noonan, RSM: You really have to have a strong project manager on the part of the buyer who can act as a liaison between the management team of the target, the seller and the service provider that’s actually executing the carve out. Because what happens is, a lot of times the management team wants a process to look exactly like it looked before. And the business needs to run exactly like it did before, and that can cost a whole lot of time and money in terms of customizing applications and systems. And if you have somebody wearing a striped shirt that can say, “You know what? We’ll consider that change, but for the time being we’re going to optimize this business to its current size, not its former size.”

What is the Rough Order of Magnitude (ROM) due diligence service?

Noonan: It’s really an abbreviated due diligence process that allows us to pretty quickly predict what one-time cost is going to be, what the operating cost is going to be going forward and how much time is it going to take for you to get that asset stood up and operating on its own. We’re able to do that at a very short period of time, in a very non-intrusive way. Our clients use that to help build their model out. They want to know is this thing going to cost me a million dollars and take three or four months. Or is it going to cost me ten million dollars and take two years, right? So we try to get them into a box so they can build their financial model on something that’s a little more defensible than just a guess.

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