Private Equity Into High-Risk Markets — the Need for a New Due Diligence Approach

Ninety-eight percent of UK private equity firms agree that traditional due diligence is inadequate for emerging market investments – yet they are not sufficiently adapting their approach.

The report, published by Kroll and Mergermarket, polls 50 UK-based private equity investors on their experience in emerging markets to uncover the most common obstacles presented in these jurisdictions.

The results, detailed in this report, show that:

• There will be a continued, if not increased, focus on investment in emerging & frontier markets.
• Respondents overwhelmingly agree (98%), that conducting due diligence on targets in emerging markets requires a different approach.
• Nonetheless, few PE firms have adapted their diligence approach to emerging & frontier markets, opting instead to increase legal and tax due diligence.