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Commercial Due Diligence – The Need for Speed

Commercial due diligence is an objective look at the strength of a target company’s customer base. It is not at all unusual for the window of completion for commercial due diligence to be as short as 2-3 weeks. To be able to gather good data in such a  small window requires a carefully designed and executed survey methodology, typically based on responses to a web-based survey.

The survey should be designed to be completed in under 15 minutes. Exceeding this threshold will result in a lower response rate as customers will grow weary in the task, or will not even begin based on the perceived length of time to complete. To meet that target requires careful planning and wording of questions, along with ruthless editing. It is important to stay focused on the objective of the survey – which typically is to answer one or more strategic questions about the target company. Other questions may be interesting and even important, but would unnecessarily lengthen the questionnaire.

The customer contact list should be carefully reviewed for accuracy – both in having the correct individuals identified at each customer and for correct contact information such as a direct telephone number and email. Valuable time can be wasted in trying to reach a contact that has incorrect contact information, or cannot offer accurate and timely opinions of the company. The firm administering the survey should be capable of filling in missing contact information.

Surveys can be completed via a web-based survey instrument. It should allow a range of types of responses (multiple choice, open-end or write-in, scaled responses, choice of one from a menu of options, etc.) to properly capture the intent of each question. In many cases, follow-up phone calls can be utilized to expand or clarify answers to strategic questions. Regardless of the platform utilized, the survey should be returned to a third party and their sponsorship should be clearly understood from the design of the web page.

Although customers of the target company certainly have a vested interest in seeing their supplier improve, there is a limit to the urgency they will place on completing a survey – even if it is well-designed and brief. To accommodate customers and minimize the potential for frustration, we recommend offering multiple methods for completion. Following up with non-respondents by telephone not only provides this option but helps to increase the response rate.

Lastly, to be able to turn around a project in a compressed time-frame, the research/consulting firm managing the process needs to have the personnel and experience to complete the analysis and interpret the results in a timely fashion without sacrificing any aspect of thoroughness or insight.