Insights

Commercial due diligence: what investors check beyond the numbers

Techtone Group · Aug 31, 2026 · Last reviewed Oct 14, 2026

Financial due diligence tells an investor whether the past numbers are right. Commercial due diligence tells them whether the future numbers are believable: how big and how healthy the market is, how strong the company’s position is, how loyal its customers are, and whether the business plan can be delivered.

The questions it answers

• Market: how large is the addressable market, how fast is it growing, and what drives that growth?
• Position: who are the competitors, how does the company differ, and is that difference durable?
• Customers: who buys, why, how concentrated is revenue, and how many customers stay?
• Business plan: are the growth, pricing and margin assumptions consistent with the market and the company’s track record?
• Risks and upside: what could break the plan, and what is not yet in it?

How the work is done

Good commercial due diligence combines outside-in and inside-out evidence. Outside-in: market data, competitor analysis and interviews with customers, former customers, suppliers and industry experts. Inside-out: the company’s own sales data, pipeline, pricing history and churn, analyzed at customer level rather than taken from the management presentation.

Customer interviews often carry the most weight. Ten honest conversations with customers can reveal more about switching risk and pricing power than any market report.

Beyond commercial: operations and technology

For many targets, especially in technology, payments and services, the plan depends as much on operations and IT as on the market. A combined view looks at operational excellence, the technology infrastructure, IT and cyber security, and integration potential: what it will take to combine the business with the buyer’s, and how long the benefits will take to arrive.

Red flags investors look for

• A few customers account for most of the revenue, or one contract is up for renewal soon after closing.
• Growth driven by price increases that the market may not accept again.
• A plan that assumes market share gains without a clear reason why competitors will lose.
• Key relationships held personally by founders or a single salesperson.
• Technology that will need substantial investment to scale or to meet regulation.

How sellers should prepare

• Prepare clean, customer-level data on revenue, retention and pricing for at least three years.
• Write down the market logic behind the plan, with sources, before the investor asks.
• Identify weaknesses yourself and show how they are being addressed; buyers discount what they discover.
• Line up customer references who will speak candidly.

Timing and scope

A focused commercial due diligence typically runs over a few weeks, alongside the financial, tax and legal work. Its scope should follow the investment thesis: if the case rests on international expansion, the work tests the target markets; if it rests on cross-selling, it tests whether existing customers actually want the additional products. Buyers sometimes start with a short red-flag review before exclusivity and commission the full work only once the main risks look manageable.

What the report should give the investment committee

• A clear view on whether the business plan is achievable, with a downside and an upside case.
• The three to five assumptions the valuation is most sensitive to, and the evidence for each.
• Specific risks that belong in the share purchase agreement or the price.
• The first priorities for value creation after closing.

A report that only describes the market without taking a view on the plan leaves the investment committee where it started. The value is in the judgment: is this plan credible, and what would have to be true for it to work?

Questions that separate a strong plan from a hopeful one

• Which customers will deliver next year’s growth, and have they said so?
• What happens to revenue if the largest customer leaves?
• Why will competitors not respond to the planned price increases?
• Which capabilities does the plan need that the company does not yet have?

After the deal

The due diligence findings are also the first draft of the value creation plan. The same analysis that sets the price should set the priorities for the first 100 days: which customers to secure, which processes to fix, and which synergies to pursue first.

Related service: Business due diligence