Most commercial due diligence failures happen before the work starts. The brief is usually the problem.
Most commercial due diligence failures happen before the work starts.
The mandate arrives late. The scope is vague. The seller's data room opens the same week the deal team needs answers. The CDD firm is briefed in a 30-minute call and told to "figure out the market." Three weeks later, the report answers the wrong questions.
This is not a CDD problem. It's a brief problem. Here are five questions worth getting right before you commission the work.
1. What decision does this CDD need to support?
This sounds obvious. It never is. "We need to understand the market" is not a decision. "We need to decide whether to underwrite 15% revenue CAGR over a 5-year hold" is a decision. The first brief produces a market overview. The second produces a view on whether your investment thesis is real.
Get specific: are you trying to confirm a thesis, stress-test an assumption, identify a risk you're not seeing, or underwrite a management plan? The answer shapes everything — scope, timing, who you talk to, what you prove.
2. What does the deal team already believe?
Your CDD firm needs to know your working hypothesis, including where you're most uncertain. If the deal team has already fallen in love with the management team or bought into a particular market narrative, the CDD firm needs to know — so they can either validate or push back with evidence. Hiding the thesis to get an "unbiased" view sounds rigorous. In practice, it produces generic analysis that doesn't address the specific risk you're actually taking.
3. What would kill this deal?
Ask this explicitly. What's the single finding that would cause you to walk? Most investors have one or two deal-breakers — a dependency on a single customer, a regulatory risk in the core market, a competitor about to commoditize the product. Surfacing these in the brief focuses the work where it matters. A good CDD firm should spend disproportionate time on the things that would actually matter at IC.
4. Who is the CDD serving — IC or management?
Both need commercial analysis, but they need different things. IC wants conviction — or a clear rationale to walk away. Management wants legitimacy and a strategic roadmap. These are not always the same document. The better question is: who is the primary decision-maker this work needs to move? Make sure the brief reflects that.
5. What does "good" look like at the end?
Push your CDD firm to describe the output before they start. What will the final deliverable contain? How will it handle the key risk areas? What will it say if the market is smaller than you think? If the answer is vague, the work will be vague. A CDD report is a decision-support document, not a research project. It should end with a clear verdict.
None of this is complicated. Most of it is just discipline about framing the work before you start it. The CDD firms that produce the most useful work are the ones whose clients show up with clear questions, not open mandates.
The five weeks you spend on the process matter less than the 30 minutes you spend on the brief.
Joe Griffith is the founder of Atalaya Insights, an independent strategy advisory practice focused on commercial due diligence, growth strategy, and value creation for private equity.