Valuations & Acquisitions: What Acquisition Due Diligence Reviews Can Teach You

Since there can be more than one type of debt (e.g., short, mezzanine, long-term), there may be a third DDR. A fourth can occur if the working capital line is provided by an additional outside bank.

DDR Methodology and Intensity

The extent of each DDR varies with the investor. The intensity of the review in descending order usually is the equity investor, followed by the short- and long-term debt sources, followed by the working capital line source. Each has certain metrics it tends to focus on, so each analysis and DDR normally is custom made.