We are asked to run commercial diligence more often than we think it is warranted. Sometimes the honest answer is that the work will not change anything, and saying so early is more useful than producing a competent report nobody acts on. Here are the situations where a GTM due diligence is the wrong spend, and what tends to serve better.
Before commissioning, ask: what finding would change the price, the plan or the decision? If nothing plausible would, the work is documentation rather than diligence.
1. The decision has already been made
The most common case, and the most wasteful. The investment committee has formed a view, the process is competitive, and commercial diligence is being commissioned so that a box is ticked and a file is complete.
The tell is the timetable. When the work is scheduled to report after the price is agreed, or with too little time to act on anything it finds, it cannot influence the outcome. It becomes an expensive record of a decision rather than an input to one.
What serves better: either move the work earlier so it can change something, or accept that what is actually wanted is a post-close plan and commission that instead, with a longer timetable, management involvement and no pretence that it informs the price. The second is often genuinely valuable. It is simply a different piece of work.
2. The growth case rests on the market, not the company
Some theses do not depend on commercial improvement. If the model assumes the business holds its share in a structurally growing market, with no material change in pricing, win rate or retention, then commercial capability is not the binding constraint on the return.
In that case the questions that matter are external: is the market genuinely growing, is the position defensible, what would erode it. That is commercial due diligence in the market-facing sense, and it is a different discipline.
What serves better: a market-facing CDD, and a light commercial health check rather than a full assessment. The useful scoping question is what proportion of modelled growth comes from the market expanding versus the company performing better than it does today. Where the second number is small, the case for a full GTM diligence is weak.
3. The business is too early to have an engine
A company doing a few million in revenue with a founder-led sales motion, a handful of customers and no repeatable process does not have a commercial engine to assess. Applying a 23-topic framework to it produces a long list of things it does not have, all of which were already obvious, and none of which is a finding.
The questions that matter at that stage are narrower and mostly about the proposition: is there evidence of genuine pull, do customers who buy stay, can anyone other than the founder sell it. Three questions, not twenty-three.
What serves better: a focused proposition and early-traction review, and honest acceptance that most of what a full assessment would recommend is simply the work of the next two years.
4. The cost is disproportionate to the decision
Diligence spend should bear some relationship to what it can move. On a small transaction, or where the equity cheque is modest, a full commercial assessment can consume a meaningful fraction of the deal costs to refine a number that was never going to move much.
This is a judgement rather than a rule, and it cuts both ways: a small deal with an aggressive growth case may warrant more scrutiny than a large one with a conservative model. The relevant comparison is not fee against deal size but fee against the range of outcomes the work could realistically change.
What serves better: a tightly scoped piece on the one or two assumptions carrying the most weight. In most mid-market cases that is pricing and retention, and both can be assessed in days rather than weeks.
5. You already know, and the issue is willingness
Occasionally a fund knows precisely what is wrong with a portfolio company’s commercial function. It has been discussed at three consecutive board meetings. What is missing is not analysis but agreement to act, or a management team prepared to act.
Commissioning an assessment in that situation is sometimes framed as building the case. It rarely works as intended. A report confirming what everyone already believes changes nothing on its own, and it can make matters worse by giving the impression that action has been taken.
What serves better: naming the actual blocker. If it is management capability or willingness, that is a people conversation rather than an analysis one. If the board is genuinely split, a short independent view on the specific point of disagreement is cheaper and more likely to resolve it than a full assessment.
When it does earn its fee
For completeness, the mirror image. Commercial diligence pays for itself reliably in a fairly narrow set of conditions, and it is worth checking whether yours are among them.
- The growth case depends materially on the company performing better than it does today — higher win rates, better pricing, lower churn, a new segment.
- There is enough time for a finding to change the price, the structure or the plan.
- The business is large enough to have a commercial process, but not so mature that the process is already well understood.
- You expect to own it for several years and want the first hundred days to start from something evidenced rather than assumed.
Where those hold, the work is among the cheapest risk reduction available in a transaction. Where they do not, we would rather say so.
Frequently asked questions
Is commercial due diligence always necessary?
No. Where the growth case rests on market expansion rather than commercial improvement, where the business is too early to have a repeatable process, or where the decision is already made and cannot be influenced, the work is unlikely to change anything.
What is the minimum deal size that justifies a GTM due diligence?
There is no fixed threshold. The more useful comparison is fee against the range of outcomes the work could realistically change. A small deal with an aggressive growth case may warrant more scrutiny than a large one with a conservative model.
Can commercial diligence be scoped down?
Yes, and it often should be. Where one or two assumptions carry most of the weight, usually pricing and retention, a focused piece on those can be completed in days and answers the question that matters.
What if we only want a post-close plan?
That is a legitimate and often more valuable piece of work, but it should be commissioned as such: longer timetable, management involved throughout, and no expectation that it informs the price.
Ready to aim higher?
If you are unsure whether commercial diligence is the right spend on a particular deal, we are happy to say so before anyone commissions anything.