The devil is hidden under the carpet
Buying a business is never a simple financial act is above all a bet on a story, that of solid growth, of loyal customers, a reliable product, a committed team. All packed in a neat data room, structured by the business bank in charge of the deal.
But three months after closing, varnish begins to crack. The CTO leaves, a strategic client withdraws, the technical debt resurfaces, the team doubts. And what seemed to be an asset is a simple facade, the investor realizes when he bought a story, somewhat far from reality.
What data room never shows
For a decade when data has been the sacred Grail, we always overestimate what is measured. Reign paintings, kpis, contracts, at the same time we underestimate what is observed. An absence of file. A team absent in Visio, a Git deposit that remained closed. These weak signals are abnormalities difficult to perceive during a sustained process. Out of uDue to diligence cannot be read, it listed, it feels and above all it must detect the dead angles that the deck does not tell.
The founder, center of gravity or breaking point?
The founder knows everything. He embodies vision, relationships, product. But by dint of concentrating everything, he raises a question, what is left without him?
A loyal team … But who?
The team seems faithful, but how to document loyalty? Sometimes it is one person. It only takes three calls. If two key talents say “I will not stay without the founder”, the buyer has just bought a sand castle.
The product is running, but for how long?
Beautiful demo, happy customers, rich features. And yet, under the hood, the backend is obsolete, technological stack exceeded, absence of tests, zero documentation. The asset is ultimately a hidden debt.
Margins on Excel, scalability on Google Sheets
When the margins are calculated in a home spreadsheet, when the CRM is tinkered, when reporting live in personal files, the organization is difficult to scalable. Too dependent on the intern, at an instant T, it does not resist change or growth.
This customer who weighs 40 % of turnover
Presented as an asset, it is actually critical dependence. He has never signed a long -term commitment and could leave tomorrow morning. No one masters this variable, and yet it is absent from valuation calculations.
A good due diligence does not validate, it must contradict
Its role is not to confirm an investment thesis. But to experience it. To find out what is disturbing, what is not said or written.
She is not only going on with a lawyer or a listener. But also with:
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- An old CTO capable of reading a backlog and opening the right files,
- An analyst trained to detect discomfort behind the storytelling.
A good deal starts with doubt
Good investors do not seek to be reassured but track down weak signals. They ask the disturbing questions. Because the failed deals do not collapse on the day of the closing, they flank much earlier, in what we have chosen not to see.
