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If you’re an investor making new platform investments or a proactive company making add-on acquisitions, you know that due diligence is critical to the success or failure of the M&A process. For potential investors or acquirers of any kind, the process includes a range of activities, from understanding the management team’s capabilities to investigating the accuracy of financial reports to assessing the status and complexity of the target’s tech stack.
While all these measures are essential, perhaps no other due diligence topic is more important than understanding the attractiveness of a target’s end market and its competitive landscape. In the private equity industry, it’s well known that a bad market will overcome a great management team almost every time. But, on the flip side, when there is a great market and even just a run-of-the-mill team, the odds of success increase dramatically.
With this in mind, top private equity investors now use an approach called commercial due diligence performed by market strategy consultants to get an unbiased read on the attractiveness of a company’s end market.
In essence, commercial due diligence is another term for a market study. Larger, well-known strategy consultancies like Bain, Boston...