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    Why PE Firms Use External Partners for Logistics Due Diligence

    In the dynamic landscape of mergers, acquisitions, and strategic investments, logistics due diligence plays a crucial role in assessing the operational health and potential risks of a target company's supply chain. Private equity firms often rely on external partners for thorough logistics due diligence. This practice not only enhances decision-making processes but also mitigates potential risks associated with supply chain disruptions and inefficiencies. The following are some of the many ways that external partners can support PE firms in driving value creation for their portfolios through logistics due diligence.

    Specialized Expertise

    • Logistics is complex and deeply operational.

    • Third-party experts (e.g., logistics consultants, supply chain analysts) bring deep domain knowledge that general investment teams often lack.

    Speed & Accuracy

    • Deals move fast; PE firms need rapid diagnostics.

    • Partners have standardized frameworks and tools to accelerate due diligence.

    Data-Driven Insights

    • External firms can extract and analyze large operational datasets (e.g., transportation spend, warehouse utilization, routing efficiency).

    • Help validate assumptions in the investment thesis.

    Uncover Hidden Value

    • Identify optimization opportunities (e.g., 3PL renegotiation, warehouse automation, route consolidation).

    • Potential to drive EBITDA growth post-acquisition.

    Risk Mitigation

    • Surface issues such as supplier concentration risk, customs exposure, or logistics compliance gaps.

    • Assess business continuity and supply chain resilience.

     

    Common Deliverables from Partners

    • Logistics cost benchmarking vs. peers.

    • Heat maps of distribution networks.

    • Site visit reports (DCs, cross-docks, 3PL facilities).

    • Contract and SLA reviews.

    • Inventory health and working capital analysis.

    • Actionable 100-day logistics improvement plans.

     

    How Logistics Due Diligence Fits into the Deal Process

    • Initial Screening (pre-LOI)
      • Light-touch diagnostic by internal ops team or trusted partner. 
    • Confirmatory Due Dilligence (post-LOI)
      • Full operational assessment and red flag identification. 
    • Post-Acquisition Value Creation Plan
      • The same partner is often retained to help execute operational improvements. 

    Redwood: Experienced Logistics Due Diligence You Can Rely On

    Redwood has over 20 years of experience delivering logistics solutions and we recognize the challenges our PE partners face in performing logistics due diligence and accelerating supply chain value across their portfolio companies. We offer complimentary supply chain and logistics analysis for your portfolio companies and we recently developed the Logistics Health Check, a simple checklist designed to identify portcos that could achieve significant savings on transportation spend through logistics optimization. Click the link below to download the checklist or learn more about our Private Equity partnerships here.