To select the best external auditor for their portfolio companies, private equity groups should refine their evaluation criteria and process.
After acquiring a new portfolio company, private equity groups (PEGs) begin the crucial task of choosing an external auditor. A strong selection can support company growth and value creation. But a weaker choice risks lower audit quality and financial reporting errors that could complicate the exit process and cause buyers to turn away from a deal.
How can PEGs choose an auditor that is the best fit for a given portfolio company? PEGs should make this decision carefully by considering all the factors unique to the portfolio company as well as collaborating closely with the portfolio company’s management. This checklist can help by defining critical auditor qualities to consider and listing the core elements to create an efficient, replicable selection process.