Diligence Questions Boards Should Ask More Often
Commercial diligence tends to focus on the market. The sharper questions are usually about the organization's ability to execute against it.
A typical commercial diligence process spends most of its time on the market: size, growth rate, competitive position, pricing power. All of that matters. None of it tells you whether the organization in front of you can actually capture the opportunity it's describing.
We've sat on enough sides of diligence to notice a pattern: the deals that underperform their thesis usually weren't wrong about the market. They were wrong about the company's ability to execute against it at the pace the model assumed.
Questions that get skipped
Beyond the standard market sizing and unit economics, we push boards and investors toward a shorter, harder list: Has this team executed a plan of this scale before, anywhere? What breaks operationally between the current headcount and the headcount the model assumes in eighteen months? Which of the growth assumptions depend on a hire that hasn't been made yet?
A model that only works if next year's hires are better than this year's is a hiring bet dressed up as a growth plan.
Execution risk is diligenceable
The instinct to treat execution risk as unknowable — a soft factor you account for with a discount rate — undersells how much of it is actually visible if you look. Operating cadence, decision-making speed, how cleanly previous growth phases were managed: these leave a trail, and that trail is usually a better predictor of outcome than another point of market sizing precision.
The firms that get this right treat commercial and operational diligence as one exercise, not two. The market tells you the size of the opportunity. The organization tells you how much of it you'll actually get.