A PE firm acquired a SaaS company for $85M based on strong revenue growth and solid EBITDA margins. Financial diligence was thorough. GTM due diligence (GTM Diligence) was light. Six months post-close, they discovered that 22% of revenue was concentrated in three customers all nearing renewal, pricing was 30% below market because the founder avoided difficult conversations, and the sales team had no process-everything depended on two top performers who were flight risks. The firm ultimately exited at a lower multiple than entry despite deploying significant capital.
Financial due diligence tells you what happened. GTM Diligence tells you what will happen-and what you need to do about it. Yet most PE firms still treat GTM Diligence as an afterthought, conducting superficial market studies and management interviews that miss the critical details.
The best firms view GTM Diligence as a value creation tool, not just risk mitigation. They use it to identify at-risk revenue before closing, quantify addressable growth opportunities, negotiate better purchase prices, and build actionable 100-day plans that hit the ground running. GTM Diligence typically pays for itself 10-20x through better deal terms and accelerated value creation.
Not all revenue is created equal. GTM Diligence reveals customer concentration, churn patterns, contract terms, pricing discipline, and retention economics. We often find that 20-30% of revenue is at higher risk than management acknowledges-upcoming renewals with dissatisfied customers, month-to-month contracts masquerading as recurring revenue, or heavily discounted deals that won't repeat.
Example: One portfolio company reported 95% gross retention. Customer interviews revealed that 15% of revenue was from a single customer threatening to leave due to product issues management wasn't addressing.
Management presents optimistic views of competitive position. Customers tell the truth. We conduct blind customer interviews, win-loss analysis, and competitive assessments to understand real differentiation, pricing power, and competitive threats. This reveals whether the company is a market leader or a commodity player surviving on relationships.
Example: Management claimed they competed on innovation. Customers said they stayed because of relationships and would switch for 10% savings. This fundamentally changed the value creation strategy.
Most targets have weak commercial capabilities-informal sales processes, no customer success function, marketing that's just lead gen, and non-existent revenue operations. These gaps limit scalability and require post-close investment. GTM Diligence quantifies the gaps and investment required to remediate them.
Example: One target had no CRM discipline, making pipeline visibility impossible. Implementing proper RevOps took 6 months and $800K-costs we factored into our valuation.
GTM Diligence sizes growth opportunities in new markets, customer segments, products, and channels. We build bottoms-up models based on realistic assumptions-not management hockey sticks. This provides the roadmap for value creation and helps justify purchase price.
Example: Identified $45M addressable market in adjacent vertical that management hadn't pursued. This became the primary value creation thesis and justified a higher multiple.
Price Renegotiation
Identifying $10-30M in at-risk revenue typically enables 5-10% purchase price reduction on $100M+ deals. That's $5-10M saved immediately.
Faster Value Creation
Entering with clear 100-day plans accelerates first-year EBITDA improvement by 3-6 months. On $10M EBITDA business, that's $2.5-5M of earlier value creation.
Risk Mitigation
Avoiding one bad deal per fund through better diligence easily justifies the cost of rigorous GTM Diligence across all deals.
Higher Exit Multiples
Companies with strong commercial capabilities built during hold period exit at 30-50% premium multiples vs. peers with similar financials.
Typical ROI: 10-20x
GTM Diligence investment of $100-200K typically drives $2-4M in value through better pricing, faster execution, and risk avoidance. Firms that systematically invest in GTM Diligence generate materially better fund returns.
GTM DD is not an expense-it's an investment in better deal execution and value creation. Firms that systematically invest in rigorous GTM Diligence:
In an environment where financial engineering no longer drives returns, commercial excellence is the differentiator. It starts with GTM DD.