Spot risks before they cost you: Why PE firms should survey earlier in the deal cycle Spot risks before they cost you: Why PE firms should survey earlier in the deal cycle
- Reading time
- 1 min
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- Potloc
- Published date
- January 15, 2025
Why traditional pre-due diligence needs a reboot.
“We’ve got a strong product, loyal customers, and minimal competition.” That’s the management team’s pitch. Expert calls backed it up: analysts and industry veterans echoed confidence in the company’s market position. But what if this optimism hides something crucial? What if, for example, the “minimal competition” is actually a growing threat from niche players? This is where quantitative surveys help you form the bigger picture.
We talked to Nicolas Bourret, a former partner at Bain & Company with 20+ years of experience advising PE firms. Bourret has witnessed firsthand the evolution of the diligence process into what it is today: where the most competitive firms are pulling quantitative insights earlier in the dealmaking process.
Back in the early 2000s, expert networks became the gold standard. A few interviews with seasoned professionals provided early insights for the pre-due diligence (pre-DD) stage, although they were prone to subjectivity. Fast-forward to 2025: the market is more competitive, the deals are more complex, and qualitative calls alone are no longer enough for PE firms to enter the diligence phase confidently.
Bourret notes that to stay ahead today, firms must combine expert calls with B2B and B2C survey data in pre-DD rather than waiting until full due diligence.
"As competition heats up, it’s no longer enough to save quantitative approaches solely for due diligence. Combining expert calls with survey data earlier in the deal cycle can give PE firms more accurate insights to increase confidence in the investment thesis; to spot risks before they snowball and seize opportunities before they slip away. It’s a higher N thing." — Nicolas Bourret
Resources from KPMG and Bain & Company echo such sentiments to PE audiences: use proprietary, quantitative data to slash risks and embed value creation earlier in the deal cycle.
What can surveys do for dealmaking teams?
Quantitative surveys don’t replace qualitative insights—they amplify them by inviting a much higher volume of B2B or B2C respondents into the conversation. Combining expert calls with B2B and B2C surveys allows firms to:
Surveys help identify risks before they become costly surprises during due diligence. By answering critical questions upfront, surveys quickly uncover more statistically significant data on customer retention, pricing sensitivities, and growing competition — things that expert calls might miss early on.
A key risk is overestimating market potential, especially in cases where deal teams “fall in love” with a deal — surveys turn qualitative, subjective feedback into measurable trends. For example, metrics like Net Promoter Scores (NPS) or willingness-to-pay thresholds provide the hard data needed to refine investment theses.
Example: A mid-market B2B deal where qualitative feedback indicated stable customer loyalty. A survey revealed a different reality: 40% of customers were considering switching due to pricing concerns. Armed with this insight, the PE firm revised its financial model, saved resources on due diligence, and negotiated a more realistic valuation.
“At the end of the day, it’s about your ability to underwrite the most competitive purchase price,” says Bourret.
During heated bidding processes, when other firms rely solely on expert calls or surface-level assumptions, a survey-driven approach makes you more competitive. Imagine entering the bidding process with precise, statistically significant data on customer loyalty, pricing elasticity, or market share trends. This level of granularity not only informs your valuation but also gives you the confidence to negotiate effectively, setting your firm apart.
According to AlixPartners’ 2024 survey of private equity leaders, driving topline growth (56%) and meeting growth milestones (64%) are among their biggest challenges for the year ahead.
Operating partners are thus increasingly joining pre-DD phases to scrutinize deals earlier and set the stage for 100-day plans that actually deliver. Quantitative surveys play a critical role in this. B2C data provides a direct line to the voices that matter most: buyers and end users, while B2B surveys provide more statistical rigor around the expert knowledge informing a deal.
"Any insights about potential market growth, customer adoption, and price sensitivity that allow you to be more aggressive in your financial modeling can give you an edge. Survey insights are more reliable so it will be easier to get the IC to approve the higher valuation."
When should dealmakers bring in surveys?
Surveys aren’t necessary for every scenario, but they’re game-changing in the right context:
When industries are crowded with small players, surveys clarify trends that individual experts can’t always capture. Aggregating feedback across hundreds of stakeholders reveals consumer preferences, regional dynamics, and pricing strategies, enabling more informed decision-making.
"For any deal where understanding market penetration trends is critical, quantitative surveys become the only option to get the depth of insights required."
For teams new to integrating surveys in the pre-DD stage, a simple step-by-step approach can be helpful:
- Start with expert calls: Use calls to identify big themes, potential risks, and questions that need answering.
- Deploy surveys to validate: Use quantitative surveys to test new themes and critical assumptions through a more statistical approach. For instance, if calls reveal strong brand loyalty, surveys can segment this by geography, customer type, or revenue contribution.
- Bridge the gaps: Combine the depth of qualitative insights with the breadth of survey data to get a fuller picture for your investment thesis.
OK, why isn’t everyone doing surveys then?
As Bourret explains, “Surveys are often viewed as unnecessary, unreliable, or too cumbersome to do outside of the full due diligence phase. The gaps are mainly around execution for quant surveys: getting the right respondents, asking the right questions, and doing it the right way. But that’s changed dramatically in the last few years.”
Expert calls have been a cornerstone of early diligence for decades. Many PE firms felt surveys didn’t add enough value to justify their use.
The Fix:
- Integrate, don’t replace. Use surveys to validate and quantify the qualitative insights from expert calls to find dealbreakers earlier or convince the IC to make more competitive bids.
- Focus on areas where surveys excel, like customer sentiment, pricing elasticity, or loyalty trends, to add precision to expert opinions.
Surveys were historically too slow for pre-DD. By the time results were ready, the deal could already be moving forward without them.
The Fix:
- Seek tools that make your job easier. Modern survey platforms streamline survey design, launch, and analysis in one place, complemented with human support that helps deliver insights in mere days, not weeks.
- Lean on experienced partners. Survey partners with expertise in supporting private equity can quickly understand your operational needs and timelines.
Low-quality samples, with fraudulent or disengaged responses, delivered by certain sample providers or marketplaces have led some firms to deprioritize surveys in favor of expert calls.
The Fix:
- Demand transparency from your provider. Advances in fraud detection have made great strides, but data quality remains a big threat with the rise of respondent fatigue and AI. Many providers still operate on the black box model of the survey industry. As a client, be wary and ask for more transparency or control around how your partners are sourcing and validating survey respondents. Look for survey partners that don’t hide their practices.
- Invest in survey design. Creating questionnaires is a delicate science. An expertly crafted survey experience that’s tailored to modern respondents’ expectations (and your specific investment thesis) can yield more engaged responses and powerful insights.
"The biggest advice I would give is to get expert help not only for sampling but also scripting and hosting the survey to maximize the quality and depth of insights. It’s all very different from preparing an interview guide for an expert call or a management meeting, as you don’t have the opportunity to clarify or interpret the answers live."
[MORE: What the research says about survey quality in private equity and consulting.]
Survey smarter, not harder.
Surveys may not be anything new in private equity, but with the right partner, they’ve never been easier to leverage earlier in the deal cycle. Ask us about how Potloc’s survey platform supports the world’s leading PE firms to surface insights that drive better deal-making and value creation strategies.