Public diligence

Washington DC-based Allied Capital is a $4 billion publicly traded business development company that makes debt and equity investments in middle-market, private companies. With thousands of public shareholders to answer to, the firm sticks to a highly regimented investment process that moves through multiple stages from initial investment screening to sealing the deal. A key hurdle in the middle of this process is due diligence. After being given initial approval by the investment committee, the deal team on a potential transaction seeks to validate historical and projected financials, assess the competitive business environment as well as market trends, and performs background checks on management, among other forms of due diligence. Private Equity Manager spoke recently with Allied managing director John Fruehwirth about his firm's carefully considered approach to due diligence.