Estancia Partners

Private Equity Investors. Asset Management Specialists.

InvestmentProcess-New

PRELIMINARY DUE DILIGENCE

Once the Estancia Investment Committee determines there is merit to pursue the investment opportunity further, a preliminary due diligence process will be initiated. By this point, a confidentiality agreement will have been signed with the Target. This phase of the process provides the opportunity to build rapport with the Target’s leadership while determining if there is a shared vision of opportunity for the business and a cultural connection. Also, this phase allows for the collection and analysis of sufficient Target financial information to develop a preliminary valuation and investment/ownership structure. Key steps in this phase include:

Diligence request list – preliminary due diligence request list will cover:

  • Detailed financial information
  • Detailed investment performance
  • Sales and marketing information
  • Client information
  • Compensation and ownership information
  • Pending legal and regulatory matters

Financial model – develop a detailed financial model and proposed investment structure and capital structure, in order to:

  • Analyze historical financial results
  • Identify and quantify opportunities to grow business post-investment (“levers to pull”)
  • Agree on operating and market assumptions to create a “base case”
  • Structure equity incentives and ownership to create alignment and address specific goals and needs of the Target
  • Set initial valuation range for the Target
  • Quantify return potential for Estancia and potential exit structures for the investment, as applicable

Term sheet – create a term sheet addressing the key terms of the specific potential investment transaction, including:

  • Strategic rationale and goals
  • Investment amount/purchase price and terms of securities
  • Capital structure post investment
  • Client consent process and purchase price adjustment mechanism, if applicable
  • Use of proceeds, including any required reinvestment in Target investment strategies
  • Incentive compensation structures, including bonus pools
  • Equity incentive and ownership arrangements to create necessary alignment
  • Growth or other strategic initiatives to be pursued, including personnel additions
  • Employment agreements and related arrangements
  • Estancia involvement and control rights
  • Exclusivity, confidentiality, conditions and other customary terms

Investment committee review – the full Investment Committee will review and approve any term sheet before it is delivered.


  • 20865 N 90th Place, Suite 200
  • Scottsdale, AZ 85255
  • Phone: 480-448-5001