Just as private equity has decided to venture back into the automotive space with a vengeance, this highly interdependent and complex industry is once again presenting unique challenges for its PE investors.

In an industry first, top legal officers of the Detroit Big Three recently participated in a panel discussion at which they divulged the secret of what keeps them up at night. Their answers highlighted a number of issues private equity must carefully analyze as it enters, exits or simply continues to operate in the automotive space

Not surprisingly, "regulation, regulation and more regulation" topped the list. Already heavily regulated and subject to increased antitrust and product recall scrutiny, these publicly traded original equipment manufacturers (or soon to be such, in Chrysler Group LLC's case), as well as their Tier 1 supplier cousins, many of which have been reaccessing the public markets, now have the added burden of complying with the innumerable regulations still emanating from the Dodd-Frank Act.

As an example, take the new Securities and Exchange Commission reporting requirements to be imposed on both foreign and domestic manufacturers if their products contain metals derived from minerals defined as "conflict minerals" -- tungsten, tin, tantalum and gold, which are mined in the Democratic Republic of the Congo or an adjoining country. The conflict minerals disclosure requirements, anticipated to go into effect in August, have already sent automotive suppliers scrambling to prepare for the mandated due diligence inquiries from their customers. In a recent joint letter sent to its supply base, Ford Motor Co., General Motors Co., Chrysler, Toyota Motor Corp., Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. urged their suppliers to engage, in turn, with their own suppliers to identify the smelters used in the supply chain to process the conflict minerals or to validate the origin of conflict minerals as recycled/scrap.

The increased globalization of the automotive industry, ­fueled in part by the constant quest for low-cost manufacturing and, of course, the allure of rapidly growing markets in the BRIC countries of Brazil, Russia, India and China in particular, requires a keen focus on implementing and monitoring the effectiveness of worldwide compliance programs. Whether to ensure compliance with the new bribery law in the U.K. or the anti-monopoly law in China, PE owners must be very mindful of the efficacy of enterprise risk management in their current or targeted automotive portfolio.

Unfortunately, the devastating combination of the March Japanese earthquake, tsunami and nuclear disaster has presented the industry with yet another significant challenge. As many highlighted in their first-quarter 10-Q risk factors or cautionary statements, OEMs and suppliers alike are still carefully evaluating the full impact of this event not only on their own operations but also on the operations of their customers and suppliers. Critical to this assessment is visibility down the supply chain both to ensure supply of critical parts and to determine which suppliers may be at risk due to the temporary plant shutdowns and work stoppages that have occurred and will likely continue through the summer.

So what about the dealflow? While there are many automotive portfolio exits in process, a successful close can still be elusive. There is an increase in foreign buyers interested in acquiring automotive technology. Many such buyers do not already have a presence in the U.S. The natural complexity of a cross-border transaction is often further complicated by a first-time foreign buyer unfamiliar with our labor and other laws with no infrastructure in place and in need of significant transition services.

Moreover, now more than ever, financial, operational and legal due diligence in an automotive deal requires not only a sharp pencil and a deal-savvy PE team, but also a thorough understanding of the symbiotic relationship between and among OEMs and suppliers regardless of geographic location. Millions in booked business may evaporate if the customer goes with an alternate source of supply because the supplier target failed to deliver a critical part (whether as a result of a subsupplier part shortage or the subsupplier's inability to survive the decline in overall industry production levels). Visibility deep into the supply chain as well as an understanding of its commercial contracts, including force majeure clauses, is critical in understanding the value of an automotive enterprise.

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Aleksandra Miziolek is the director at Dykema Gossett PLLC's automotive industry group.