Efficiency in research
Editor’s note: Adam Dear is senior vice president of client relations for the Americas at IncQuery. Dear has more than 15 years of experience in primary research and client strategy for consulting and investment firms. He holds a Bachelor of Business Administration in marketing and real estate from the University of North Texas. Find Dear on LinkedIn.
Private equity firms don't have the luxury of chasing every credible opportunity. Valuations remain elevated in many sectors, competition for high-quality assets is intense and deal teams are being asked to reach investment conclusions on compressed timelines. The result is a more unforgiving diligence environment, where the cost of pursuing the wrong deal can be just as damaging as missing the right one.
In this environment, the margin for error is shrinking. Pursuing the wrong deal isn't just a sunk cost; it consumes leadership attention, deal-team time, external diligence spend, investment committee bandwidth and, most importantly, the opportunity to focus on better assets. PE firms need to identify good deals faster and kill weak ones sooner.
Conviction needs to start earlier
Diligence has always been about building conviction. But conviction can't begin only once the full commercial diligence workstream begins. Before a firm commits significant time, budget and internal focus, deal teams need a faster way to pressure-test the investment thesis and determine whether an opportunity deserves deeper pursuit.
In many cases, that responsibility falls to an individual investment professional or a small deal team.
Whether working individually or as a team, investment professionals often help test a market, evaluate the competitive landscape, assess customer behavior and pressure-test key assumptions in the investment thesis. They are expected to move quickly, synthesize fragmented information and help determine whether a deal has enough merit to warrant additional resources. That work has always required judgment. Increasingly, that early judgment also needs to be backed by evidence.
Primary research should be a filter, not just a final check
Expert calls often begin early in diligence, giving teams directional input and context. Surveys, however, are still more commonly introduced after an opportunity has moved further down the funnel, when teams are ready to validate assumptions at scale. In a faster, more competitive market, firms need stronger signals earlier – not only qualitative perspectives, but quantitative evidence indicating whether the investment thesis merits deeper pursuit.
Do customer needs, purchasing behavior and demand patterns challenge or support the initial investment thesis? Why do customers choose the target company, stay with it or leave? Which elements of its value proposition matter most? Are switching barriers real or overstated? Is demand broad-based or concentrated in a narrow segment? Which competitors are customers considering, and why?
These aren't questions firms can always answer confidently through secondary research alone. Market reports, public data and desktop research can provide useful context about what's happening. Still, they often can't explain why customers behave the way they do or provide the specificity required for a live investment decision. Early primary research helps explain the behavior behind the data by giving deal teams direct evidence from customers, buyers, industry participants and other relevant decision makers.
The goal isn't to replace full diligence. It's to determine whether full diligence is warranted.
From validation to triage tool
A strong early research check can help firms decide which opportunities deserve more resources, which assumptions need further testing and which deals should be killed before too much time and capital are committed.
That matters when deal teams are evaluating multiple opportunities under tight timelines and a high bar for rigor. Investment professionals may need to move from thesis to evidence before a full diligence workstream is underway. Giving them a fast, focused way to test the most consequential assumptions can help the firm direct deeper diligence toward the opportunities with the strongest support.
Matching research to the decision
That doesn't mean every early-stage deal needs a full survey or exhaustive research process. It means the research effort should match the decision. A short, focused survey can test several related questions at once: how customers perceive and use the target company’s offering, why they buy, what influences loyalty or switching and whether key assumptions in the investment thesis hold up across the relevant audience.
The value comes from asking the right questions while there's still time to change the outcome.
Challenging assumptions before momentum builds
When research is delayed until the later stages of diligence, it can become confirmatory. By that point, teams may already have spent significant time building a thesis, socializing the opportunity internally and preparing for investment committee discussion. Early primary research provides an opportunity to prove or disprove hypotheses with evidence rather than accept incorrect assumptions at face value.
A faster no is a sign of discipline
The best PE firms aren't just trying to move faster. They're trying to make better decisions about where to spend their time. Killing a bad deal early isn't a failure of conviction. It's evidence that the firm had the discipline, process and information needed to avoid chasing a weak opportunity too far.
As the diligence process continues to evolve, primary research can play a larger role before the formal diligence phase begins. Firms that use it well can enter investment committee discussions with stronger evidence, deploy external diligence resources more selectively and focus their energy on the opportunities most likely to withstand scrutiny.
In private equity, speed matters. But speed without judgment can create risk.
The real advantage comes from using evidence earlier, not only to find the right deals, but also to walk away from the wrong ones before they consume time, capital and conviction.