Commercial diligence consultant

What this seat actually does

Commercial diligence examines the business from the outside in: whether the market is growing or quietly shrinking, where the target genuinely sits against its competitors, why customers actually buy from it, and whether those reasons will survive a change of ownership. The centrepiece is usually blind customer interviewing, where someone the customer does not know asks what they really think.

It is the workstream that most often changes a buyer’s mind, because financial diligence can only tell you what has already happened. A business with clean books and rising margins can still be sitting in front of a structural shift its owner has decided not to see.

When you need one

Inside exclusivity, in parallel with the quality of earnings review, on any acquisition large enough that being wrong about the market would hurt. Also useful earlier, at the thesis stage, to test whether a sector is worth searching in at all.

How they charge

Fixed fee for a defined scope, driven mostly by how many customer and channel interviews are included. That interview count is the real variable, so compare proposals on it rather than on headline price.

What to ask before you hire

• How many customer interviews will you run, and will they be blind?
• What would you need to find for you to tell me not to buy this?
• How do you handle a target whose customer list is confidential until late in the process?
• What do you know about this sector already, and what would you be learning on my money?

How to compare candidates

• Sector knowledge is worth paying for here. A generalist spends your first two weeks getting oriented.
• Insist on blind interviewing. Customers tell a stranger things they will not tell the owner’s consultant.
• Ask to see a redacted sample report, and check whether it reaches a conclusion or merely presents findings.

The mistake owners make

Treating the seller’s own market study as commercial diligence. It was commissioned to sell the company, and it will not contain the sentence that changes your mind.

What this is not

Not a quality of earnings review, which tests the numbers. Not a valuation. This asks whether the business will still be good, not whether it has been.

The Institute accepts no payment from any advisor, takes no fee tied to any transaction, and does not place or refer professionals for compensation. This entry describes a role, not a recommendation of any firm.