Inside the Real Deals Due Diligence Report 2025: What It Tells Us About Where PE Diligence Is Heading.
Rational Partners featured as an expert contributor alongside some of the industry's leading advisory firms. Here's what the report reveals about the evolving diligence landscape — and why technology has moved to the centre of it.
Rational Partners featured as an expert contributor alongside some of the industry's leading advisory firms. Here's what the report reveals about the evolving diligence landscape — and why technology has moved to the centre of it.
The Real Deals Due Diligence Report is one of the definitive annual snapshots of how private equity approaches pre-deal assessment. The 2025 edition, published in December, makes one thing abundantly clear: the scope of what diligence must reveal has expanded significantly, and the bar is still rising.
We were proud to contribute the technology due diligence perspective this year. Our co-founder Rob Elkin authored The Proactivity Playbook, a feature examining how proactive technology audits are reshaping deal preparation across the mid-market. But the report goes well beyond technology — and the broader themes reinforce exactly why technology credibility now matters so much in transaction contexts.
Due Diligence Is No Longer a Compliance Exercise
The report's opening feature, Optimum Due Diligence, captures a fundamental shift in how investors approach the process. NorthEdge, YFM, BGF and others all describe the same evolution: moving from standard risk-assessment workstreams towards tailored, value-creation-focused diligence.
As NorthEdge's Phil Frame puts it, the shift away from standard workstreams towards a more tailored and value-creation-focused approach is the biggest theme he's noticed in recent years. YFM's Stephen Murray echoes the sentiment, describing due diligence increasingly as an opportunity to deepen understanding and refine the value creation strategy rather than simply assessing risks.
This matters because it validates the positioning we've advocated for years: technology diligence shouldn't just catalogue risks. It should inform and accelerate the value creation plan.
Management Diligence: A Growing but Uneven Picture
One of the report's more provocative sections explores the state of management due diligence. The findings are striking — despite near-universal agreement that management quality is the single biggest factor influencing exit returns, formal MDD remains inconsistent across the industry.
Some firms like BGF and YFM now commission MDD on every deal. Others still treat it as optional. Alvarez & Marsal's Mike Trenouth is blunt in his assessment, noting that management is often the single most important factor influencing returns at exit, yet it's not getting enough attention.
This gap between intention and execution mirrors what we see in technology diligence. Everyone agrees it matters. Not everyone acts on it early enough.
Data Is Emerging as Its Own Diligence Workstream
Chelsea Wilkinson of DataDiligence makes a compelling case for separating data diligence from technology diligence entirely. Her argument is straightforward: growth plans increasingly rely on data-led automation, analytics and AI. Technology alone doesn't deliver that value — the data flowing through those systems does.
Wilkinson introduces the concept of "data debt" — the backlog of quality, completeness and connectivity issues sitting in a business's data that slow or block the ability to perform analytics and AI. She notes that nearly every information memorandum now claims some form of AI capability, but testing those claims against the underlying data frequently reveals a different story.
This aligns with what we observe in our own technology audits. AI claims are everywhere. Evidence-based AI maturity is not.
Customer Evidence Is Replacing Top-Down Market Analysis
GCS founding partner James Tetherton outlines how commercial due diligence is evolving beyond theoretical market sizing towards direct customer-level evidence. The disconnect he identifies is clear: total addressable market analysis shows possibility, but customer-level evidence shows reality.
In an investment landscape where organic growth is harder and multiple expansion is no longer doing the heavy lifting, investors need more detailed insights to build conviction. For many mid-sized businesses, performance is shaped by the behaviour of individual customers rather than broad market dynamics.
This resonates strongly with our work. When we audit technology functions, we always examine how product decisions are informed by actual customer evidence versus internal assumption. Weak product processes — often diffused across multiple C-suite executives and driven by sales hearsay rather than structured research — remain one of the most common challenges we identify in mid-market companies.
Financial Diligence Is Recalibrating for a Different Market
The report's financial due diligence section paints a picture of a market where the old rules around valuations and EBITDA adjustments are being stress-tested. With mid-market multiples averaging at the lowest levels since 2017, buyers are far more forensic in their examination of revenue quality, margin resilience and cash generation.
Aggressive EBITDA bridges and optimistic run-rate adjustments that might have been accepted during peak market conditions are now being scrutinised heavily. For technology leaders in portfolio companies, the implication is clear: technology claims in information memoranda need to be backed by operational evidence, not aspirational roadmaps.
Behavioural Signals Are Becoming Part of the Diligence Toolkit
Perhaps the report's most forward-looking section examines how investors are incorporating behavioural signals into their assessments. Working habits, communication patterns, decision-making cadence and organisational rhythm are increasingly used to judge transformation readiness.
Fairgrove Partners' Patrick Woodrow captures the essence of this shift: digital transformation projects are not just about technology — they're about different ways of working. You have to take the people with you.
This is a principle we apply in every engagement. Our 5P framework deliberately examines People alongside Platform, Process, Protection and Product precisely because technology transformation fails without the right leadership dynamics, team structures and organisational readiness.
Where This Leaves Technology Diligence
Reading the report in full, one theme cuts across every section: investors want operational reality, not presentation decks. Whether the lens is financial, commercial, technological, organisational or data-focused, the consistent demand is for evidence-based assessment that reveals how a business actually operates — not how management says it operates.
Technology sits at the intersection of all of these workstreams. It underpins the data that financial diligence relies on, the platforms that commercial propositions are built on, the processes that operational efficiency depends on, and the security posture that protects enterprise value.
That's why the proactive approach we advocate — commissioning independent technology audits well before a transaction process begins — isn't just about avoiding surprises. It's about building a credible, evidence-backed narrative that holds up across every diligence workstream.
The sponsors who get this right gain fewer surprises, tighter alignment between technology capability and commercial messaging, and a clearer route to value realisation.
Read the full report
Read Rob Elkin's full article, The Proactivity Playbook, and the Real Deals Due Diligence Report 2025.