What Should You Be Looking For in Commercial Due Diligence?

Pitch decks are exactly that - decks built for pitching. They're shiny, polished documents designed to impress potential investors, and that's not a criticism, it's simply what they're for. But scratch the surface, and it rarely takes long to find something that challenges the narrative the deck is trying to sell.

Most investment firms know this already. They know they need to establish whether the forecasts are viable, whether the supply chain is secure, and where the sales leads actually come from. These questions are transferable - the process and the methodology are broadly the same whatever the industry. What's often missing is the specific market expertise that can turn an interesting investment into a clear no-go, or a must-do.

A starting checklist

The list below covers a number of points worth understanding properly. It isn't exhaustive, and it deliberately leaves out some of the more obvious items - along with anything specific to a niche, which is exactly where an industry expert needs to be brought in.

• What are the market headwinds and opportunities?
• Does the historical sales data actually support the forecast?
• How does a proper competitive market analysis confirm market position and pricing?
• What does the internal pricing model look like, including discounts and management approvals?
• Is the go-to-market strategy clear - and does everyone in the business actually understand it?
• What's the sales opportunity conversion rate? How much effort turns into revenue?
• Are the competitive advantages backed by evidence, or are they simply opinion?

Why the last question matters most

For me, that last point is probably the most important of all. If one assumption has been allowed to stand unchallenged, it's likely there are others sitting quietly beside it. This is exactly where an expert from the industry earns their place - they can cut through the narrative quickly and spot assumptions that a generalist due diligence process might miss.

Assumptions aren't automatically a problem. They can be entirely valid - but only when they're backed up by relevant data and genuine industry experience. What you should never do is rely on a single source, and you should certainly never rely on data provided by someone who stands to benefit from the outcome.

The value of specific expertise

Generic due diligence will tell you whether the numbers add up on paper. It won't necessarily tell you whether the market position is real, whether the pricing model would survive contact with a knowledgeable competitor, or whether the go-to-market strategy is actually understood beyond the leadership team. That's the gap specific market expertise fills - and it's often the difference between a deal that looks good and a deal that is good.

If you're weighing up an investment and want a second pair of eyes with genuine sector knowledge, that's exactly the kind of scrutiny worth building in early, not after the term sheet is signed.