New Modularised Pre-investment Assessment & Commercial Due Diligence (CDD)
Updated: Jan 7
For years Commercial Due Diligence has focused on market assessment, product fit and competitor analysis. It's basically a market study, and there's nothing particularly wrong with that, in developing an objective view of the market, the market size, growth, risks and opportunities.
However, Commercial Due Diligence could and should be much more than this. It should be a commercial assessment of value creation opportunity, and an assessment of the businesses capability and capacity in delivering those opportunities. It should be a launchpad for post-investment scale-up, growth or integration. It should be part of strategic planning and standard operating procedure for any investment.
A New Growth Roadmap
We've been working with Venture Capital companies, Private Equity firms, portfolio companies and businesses seeking investment to create a new kind of pre-investment commercial assessment. It's a new systematic approach focused on the viability of market opportunities, offer, product and service fit and a business's commercial capability to realise them. It's based on 18 disciplines extracted from Adaptomy DNA, a proprietary methodology for systematic quantification of value, commercial strategy, opportunity and operations.
Commercial capability, a business’s ability to identify and deliver current and future value, has become one of the centre-pieces of investment strategy. Even more so today, where the competence to re-imagine markets, find new customers, pivot ‘in-market’ and re-sequence operations quickly without losing commercial traction has become a significant differentiator.
Adaptomy’s Growth Roadmap is a complete and ongoing value management system to drive differential advantage, ARR, free cash flow and capital value for investor-backed businesses. It’s a template to focus on current and future customer value delivery and adapt quickly to changing environmental, economic and market conditions. But for investors, it’s also a blue-print for repeatable, systematic value creation in more traditional and impact investment portfolios. As a managing director of Strategic Equity said in one Private Equity firm:
"We needed an integrated approach that amplifies the value of commercial due diligence and feeds seamlessly into post-investment success."
The value of a systematic, modularised approach
Codifying learning through multiple deal cycles, taking an end-to end perspective and using integrated deal and post-investment teams can offer investors earlier and more extensive insight into commercial opportunities and capability to deliver against them.
We tackle due diligence, scale-up, integration and growth as one programmatic process - a growth roadmap for integrated due diligence, value management and exit. Our modular approach lends itself to efficient scoping, effective focus while still remaining flexible enough to cater for different investment needs and portfolios.
Advantages for investors
Key advantages for investors in addition to market analysis, competitor assessment and determination of commercial risk, opportunity, capability and capacity, commercial strategy and operations (Marketing, sales, support and performance improvement) include:
Modular design to support a variety of investment thesis and projects
Critical paths that offer transparency and a clear sense of direction
Diagnostics that help focus on specific problems and opportunities
Pre-defined disciplines to encourage meaningful measurement
Clear structure for informed decision making
Pre-configured processes to accelerate operational improvements
New operating model for systematic value management
How businesses can out-perform expectations
We see this new kind of pre-investment assessment as a way to quality and quantify an investment but also platform for accelerated post-investment scale-up, integration and growth. It's the start to building responsive commercial operations find and develop new market opportunities and consistently deliver long-term commercial and customer value. Benefits for business of pre- and post-investment approaches like this include:
Clear definition and roadmap to systematically build differential advantages
Aligned customer, business, commercial and operations strategies
Quantified opportunity and value propositions
Effective Go To Market planning, pricing and and 'in-market' operations
Tight integration of financial and commercial performance metrics
Continuous, systematic performance improvement
Higher cadence strategy and execution
New 'value centric' operating model
Why have we developed this?
We developed this new pre-investment assessment, the Adaptomy Growth Roadmap, a new form of Commercial Due Diligence to change the way commercial determinations are made. We did it to more accurately, more effectively assess both risk and opportunity, in markets, strategies and operations. We did it to inform decision making, to ensure the right recommendations were made to build commercial teams, capability and capacity.
We did it in a way that introduces systematic, repeatable, measurable results and tangible benefits for investors and the businesses they invest in. But most of all we did it, because that's what investors, their advisors and the businesses they invest in, asked us to do, to fix the problems and overcome the limitations of existing CDD approaches.
Get in touch
If you want to find out more, if you're an investor, a business looking for investment, a merger and acquisitions team, just contact us, call us, we'll be happy to talk through the details.