Commercial due diligence questions.
A business forecast depends on assumptions about customers, demand, pricing and delivery. Put each important assumption beside the evidence for it, and name what could change your view.
Start with the use of the research
Commercial due diligence examines the commercial case behind a business and its plan. ICAEW's guidance describes evidence from markets, competitors, customers and business performance as part of that work.
Define the question and who will use the findings. Are you examining a new market, a growth plan or assumptions that a transaction team needs investigated? A narrow expert contribution and responsibility for the whole diligence project are different assignments.
This guide focuses on business evidence. It does not provide a valuation, investment recommendation, financial audit or legal conclusion.
Questions worth separating
Customers: Who buys, who uses the product and who approves payment? What have they actually purchased, renewed or stopped buying?
Demand: Does the evidence show interest, trial, committed orders or repeat purchases? Which period, customer group and conditions does it cover?
Price: What did customers pay after discounts, credits and service commitments? What changes if introductory terms end?
Competition: Which alternatives did buyers seriously consider? Include doing the work themselves, delaying or keeping the existing supplier.
Delivery: Can the company fulfill the demand at the promised quality, timing and cost? What additional people, capacity or working capital would be needed?
An assumption and evidence ledger
Illustrative expansion example; all observations below are hypothetical.
A distributor wants to enter a neighboring market. Management points to inquiries from prospective customers and two trial orders. The plan assumes repeat business at normal prices and delivery from the current warehouse.
| Claim | Evidence available | What remains open | Next check |
|---|---|---|---|
| Customers will switch. | Two buyers placed trial orders. | Why they tried it and what would make them reorder. | Speak with the buyers about their actual choice and requirements. |
| Demand will repeat. | Several inquiries and the two trials. | Whether interest is recurring, seasonal or specific to a temporary shortage. | Follow the same customer group and distinguish inquiries from paid repeat orders. |
| Normal prices will hold. | Trial invoices include introductory terms. | Acceptance after those terms end. | Test a clearly stated normal-price offer without treating interest as an order. |
| Current delivery can support expansion. | The warehouse handled two trial shipments. | Capacity during peak weeks and effects on existing customers. | Examine peak workload and run a bounded operational test. |
“Evidence available” is not the same as “claim established.” Two trials can be useful evidence about those trials while leaving repeat demand unresolved.
Consider two explanations
A repeatable need: buyers may be dissatisfied with their existing supplier and willing to reorder at normal terms. Interviews, repeat-order behavior and delivery evidence could support a larger test.
A temporary opportunity: buyers may have ordered only because of a shortage or introductory discount. The same initial sales could then overstate durable demand.
Do not choose an explanation because it makes the forecast easier. Identify the observation that would distinguish them, and record which part of the plan changes if the assumption is wrong.
Make the conclusion inspectable
For each material claim, record the evidence source and date; the customer group or period covered; its limitations; the unresolved question; and the consequence for the plan.
State confidence in words with a reason: “Supported for the two trial customers; repeat buying at standard terms remains untested.” Avoid a numerical confidence score that implies a precision the research does not have.
An expert interview can improve understanding, but one person's view does not become a market estimate. Combine relevant evidence and preserve contradictions instead of averaging them away.
Agree who owns the next work
A commercial question may require customer research, operational investigation or specialist transaction work. Name the owner of each open question and the limits of the current findings.
For ownership-transfer evidence, use preparing a business for sale. For a defined contribution from Stan, see commissioned business research. Transaction, accounting, tax, legal and investment conclusions remain with appropriately qualified professionals.