The role of Commercial Due Diligence is to drive a decision.
But in a world where 60% of failed deals are attributed to DD oversights, CDD is clearly not a decisive resource. This is particularly true of the high-growth tech sector.
Why are you missing the risk and opportunity in tech assets?
The old measures of risk are redundant
- The current state – pages of financial analysis and TAM-assessments.
- But strength is often driven by new measures. Marketo was losing money when bought by Vista Equity Partners at a 64% premium to its stock price. But when it sold, it generated a $3bn return.
- Why? Success was driven by their technical currency – pace, speed and agility. A check-list often misses nuances which drive tech firms forward.
Convention does not form a view of the future
- The current state – traditional measures of growth, from profit margins and market shares, cloud high-growth opportunity.
- What should change? Shift focus to hidden pools of growth nuanced for each technology. For example:
- Flipping the business model from cost-led to market-led.
- One of our PE-backed clients saw a 30% revenue increase within 3 weeks after one pricing change.
- Monetising hidden assets, from data to services.
- We identified a $37.7bn increase in market value for one client based on the data-set they were sitting on, and the nature of this data-set (broad vs deep).
- Flipping the business model from cost-led to market-led.
Unit economics matter, but have you missed the real risk or opportunity hidden in your next tech deal?
