Commercial due diligence is the only workstream whose main evidence does not come from the seller, which is exactly why it is the one that changes minds. Financial, legal and technical diligence examine what the company hands over. Commercial diligence asks the market whether the story is true: customers, competitors, pricing and the growth the plan depends on. This page sets out the four areas and what each is really testing.
Customers, and the interviews that change minds
A small number of structured conversations with real customers produces more useful information than any amount of document review. Why they bought, what they would switch for, whether they know the company is for sale, and how they would describe the alternative. It is also the hardest thing to arrange without disturbing the business.
Market size and the growth in the plan
Whether the market is growing at the rate the model assumes, and whether the company can take the share the plan needs. Sellers present the largest defensible market; the useful question is the addressable one for this company with these people and this product.
Competition, including the ones the seller left out
Named competitors, their trajectory, and what a customer sees as the alternative, which is frequently doing nothing rather than a rival. A CIM that lists three competitors when customers name six is not lying; it is describing the market the seller sells against rather than the one buyers choose in.
Pricing, which is where the value creation plan usually lives
Whether prices have moved, what customers would tolerate, and how much of the thesis depends on an increase nobody has tested. Pricing is the most common value creation lever in a mid-market deal and the least evidenced one at the point the committee is asked to approve it.
Questions people ask about commercial due diligence checklist
What makes commercial diligence different?
Its evidence comes from the market rather than from the seller, which is why it is the workstream that changes minds.
Are customer interviews worth the disruption?
Usually yes. A small number of structured conversations produces more than any amount of document review.
What is most often untested?
A pricing increase in the value creation plan. It is the most common lever and the least evidenced at committee.