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.
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.
Converting assumptions to evidence requires a systematic approach:
Evidence Required:
Evidence Required:
Evidence Required:
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."
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 best GTM due diligence (GTM Diligence) doesn't stop at identifying issues-it becomes the foundation for your 100-day plan. Here's how:
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.
You've identified the specific risks that could derail the thesis. Your post-close plan addresses them immediately, before they become problems.
Your growth plan isn't based on management's aspirations-it's grounded in evidence about what's actually achievable with your resources.
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 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.
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.