The M&A market continues to be a “seller’s” market, significantly increasing the risk of doing deals with today’s high valuations.
As private equity firms become more hands-on at the earliest moment in the ownership of the company, defining an aligned go-to-market strategy and key milestones begins in pre-LOI to accelerate growth. As a result, investors are even more apt to utilize outsourced pre- and post-LOI market due diligence to balance their internal efforts.
When deep market and company diligence is performed early with the right expertise, it supports informed input into the go-to-market plan.
Diligence may uncover limited planning and/or vision of the future. The company developed a strategy without gathering facts about the current state of reality with customers, competitors, or its market.
It could also indicate that the Company never considered unusual scenarios that may shake the basic business model assumptions.
Finally, the investigation may reveal that the Company developed a sound strategy, but it is not executing effectively, or it is under-resourced in some way.
When looking at a potential D2C acquisition or investment, look beyond the marketing metrics.
