commercial-due-diligence

Commercial due diligence evaluates a target's market attractiveness, competitive position, customer quality, and revenue sustainability. It structures analysis into six workstreams covering TAM/SAM/SOM, Five Forces, retention metrics, and recurring revenue to produce a decision-ready investment recommendation.

Assessing market attractiveness involves scoring TAM/SAM/SOM, growth drivers, and lifecycle stage. Competitive positioning uses Porter's Five Forces, HHI concentration metrics, and competitor benchmarking to evaluate entry barriers and the sustainability of competitive advantages.

Evaluating customer quality requires analyzing customer concentration, retention rates, NPS, CAC, CLV, and recurring versus one-time revenue. This framework-driven evidence mapping reveals pricing power and pipeline health to determine long-term revenue stability.

Quantifying growth and synergy involves identifying expansion opportunities and mapping synergy potential with specific timelines, probabilities, and expected value calculations. This process outputs actionable data for post-deal value creation planning.

Commercial due diligence concludes with an integrated report providing a decision-ready investment recommendation. It explicitly maps framework-driven evidence while documenting underlying risks and assumptions to support M&A pre-screening and deal planning.

Analyzing recurring revenue and customer concentration is necessary during M&A pre-screening to identify revenue dependency risks. This process evaluates whether a target's revenue is heavily concentrated among few customers or lacks predictable recurring income.