PE Firms Win by Knowing What They're Buying
SBI Wayforge™ in the First 100 Days
SBI Wayforge™ provides the quantitative insight and benchmarking that strengthens 100-day execution. The platform helps sponsors and management validate assumptions, establish operational baselines, and track the KPIs that matter most. With a unified data foundation, leadership teams gain clarity on where value will be created and how to focus early efforts to achieve the annual plan.
Explore SBI Wayforge™In private equity, you win or lose based on what you know before you sign. The difference between a home run and a writedown often comes down to one thing: did you really understand what you were buying?
Too many firms treat due diligence as a box-checking exercise. They validate financial statements, run quality of earnings, review legal docs-and miss the commercial realities that will determine whether they make money.
The Assumption Trap
Every deal starts with assumptions. Management tells you about their competitive advantages, their customer loyalty, their growth trajectory. The CIM paints a picture of a company poised for expansion.
And these aren't lies-they're management's genuine beliefs about their business. But beliefs aren't evidence. And in PE, you can't afford to invest based on hope.
The firms that consistently deliver returns are the ones who systematically convert assumptions into evidence before they invest. They test every claim. They validate every assertion. They know what they're buying because they've done the work to find out.
From Assumptions to Evidence
Converting assumptions to evidence requires a systematic approach:
Assumption: "We have strong customer relationships"
Evidence Required:
- • Customer interviews revealing actual satisfaction and switching costs
- • NPS scores and renewal rates by customer segment
- • Win/loss analysis showing why customers choose or leave
- • Competitive bid data showing price sensitivity
Assumption: "We're the market leader"
Evidence Required:
- • Market share data from third-party sources, not internal estimates
- • Competitive win rates in head-to-head situations
- • Brand perception studies with buyers
- • Pricing power relative to competitors
Assumption: "We can grow 25% annually"
Evidence Required:
- • TAM analysis with bottoms-up validation
- • Sales capacity modeling showing team can deliver volume
- • Pipeline analysis revealing quality and conversion rates
- • Customer expansion potential with existing base
The Evidence Standard
"If you can't point to specific data that validates a key assumption, you don't know it's true. You're hoping it's true. There's a big difference."
Turning Risk Into Opportunity
Here's what separates great PE firms from the rest: they don't just identify risks during diligence-they figure out how to turn those risks into opportunities.
When you discover customer concentration, that's not just a risk-it's a roadmap. You now know exactly where to focus your customer diversification efforts post-close.
When you find that sales productivity is below benchmark, that's not just a problem-it's an opportunity. You can quantify the value creation potential from getting to market-standard productivity.
When you uncover pricing that's below market, that's not just leaving money on the table-it's a clear path to margin expansion.
The GTM Due Diligence Value Creation Bridge
The best GTM due diligence (GTM Diligence) doesn't stop at identifying issues-it becomes the foundation for your 100-day plan. Here's how:
Prioritized Opportunities
GTM Diligence reveals which levers will drive the most value. You know where to focus from day one because you've quantified the impact of each opportunity.
Risk Mitigation Plan
You've identified the specific risks that could derail the thesis. Your post-close plan addresses them immediately, before they become problems.
Validated Business Plan
Your growth plan isn't based on management's aspirations-it's grounded in evidence about what's actually achievable with your resources.
Real Example: Software Services Business
We recently worked with a PE firm evaluating a software services company. Management projected 30% growth. The CIM showed strong customer relationships and a differentiated service model.
Our GTM Diligence revealed:
- The Risk: Top 5 customers represented 60% of revenue (vs. 40% disclosed). Three were actively evaluating alternatives.
- The Opportunity: Sales team was producing $800K per rep vs. $1.2M benchmark. Clear path to productivity improvement.
- The Reality: Growth was coming from price increases, not new customers. Pipeline was thin and conversion rates were declining.
The outcome: The firm adjusted valuation to reflect risk, negotiated seller financing tied to customer retention, and built a post-close plan around sales productivity. They knew exactly what they were buying-and how to fix it.
The Winning Approach
PE firms that consistently win don't have better deal flow. They don't pay less. What they do is understand more.
They turn assumptions into evidence. They convert risks into opportunities. They know what they're buying because they've done the hard work to find out.
And that knowledge-that evidence-based understanding of the commercial reality-is what separates winning investments from wishful thinking.