The Blackstone Group is the largest alternative asset manager in the world, with over $104.3 billion in fee earning assets under management. During 2010, Blackstone's private equity group was considering an investment in the US power and utilities sector with an attempt to acquire 100% of the outstanding stock of Dynegy Inc. Understanding the complexities of the US power market and the business of independent power producers was critical to Blackstone. Industry knowledge was a key factor when Blackstone decided which external advisors to hire to advise them during the due diligence process.
PwC provided a broad range of pre-close due diligence services, including financial due diligence, accounting advisory, tax structuring and tax due diligence, trading risk management due diligence, human resources due diligence, IT due diligence, valuation and insurance risk management due diligence. Key areas driving value were tax structuring, analysis of the hedge book and key facility agreements, analysis of normalized EBITDA, identification of potential debt-like items and understanding the target's liquidity and forecasted available cash position.
“During several months of due diligence, PwC worked closely with Blackstone to put ourselves in the client's shoes. Large volumes of information were synthesized to provide Blackstone with advice on key value drivers affecting the transaction. Communication across PwC lines of services, with other external advisors and with the client throughout the process, was critical to developing a deep client relationship built on a foundation of trust” (PwC)