In the private equity due diligence process

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Question

In the private equity (PE) due diligence process, understanding a target company's sustainable competitive advantage is paramount. Which of the following best describes the approach to assessing whether or not a company has a sustainable competitive advantage and how it evolves over the course of the deal process? At the outset, the PE firm centers its analysis on the target company's customer loyalty and retention rates, later transitioning to an evaluation of its supply chain robustness and vendor relationships. The PE firm starts this process by getting a strategy consultant to evaluate the competitive position of the company, then the PE firm does its own work to validate this positioning. The PE firm begins with a macro-level evaluation of the target company's market standing and competitive dynamics. As the deal progresses, the focus shifts to a micro-level analysis of the distinct operational, financial, and strategic elements underpinning its competitive advantage. Throughout the due diligence process, the PE firm predominantly evaluates the target company's year-on-year revenue growth, viewing it as the ultimate measure of competitive advantage.

Reference no: EM133784030

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