Optimising CDD for smaller deals
- Hugh Porter
- Jul 17
- 3 min read
Focused advice for deals between £3 to £20m
Commercial due diligence in the lower mid-market often has to do more with less. Budgets are tighter, deal teams are leaner, and expectations from investment committees remain high.
For deals in the £3 to £20 million range, sponsors and lenders often expect outsourced CDD to be part of the process even for smaller transactions. But while deal sizes, and therefore budgets, have stayed broadly the same, providers are busier and fees have steadily increased.
That has left many deal teams stuck in the middle, expected to deliver high-quality diligence without the budget to match.
But tighter budgets do not have to mean lower quality. They create an opportunity to sharpen focus and rethink what is really essential.
Here is where we think firms can get the most value.
1. Shorter, targeted scopes
Trying to cover everything wastes time and money. Fully scoped CDD reports on tighter budgets often rely too much on generic secondary research, leading to surface-level insights that feel familiar but offer limited value.
Instead, the most effective CDD starts with a tight investment thesis. What exactly needs to be true for this deal to succeed? Focus on testing those specific assumptions that drive the investment case.
This keeps the project efficient without compromising on depth. Even with a limited budget, the goal should be to reduce the scope questions not the confidence of the findings. Scope should shrink, not standards.
2. Make it work post-close
In the lower mid-market, there is often no budget left for a separate post-deal strategy project. That means diligence needs to do double duty and stay useful beyond signing.
CDD should link directly to the 100-day plan. What are your priorities as the new owner? What changes need to happen early? Your CDD provider should help answer those questions with insight on customer segments, pricing opportunity, sales planning or growth blockers.
You should expect to come away with clear commercial priorities as well as product development ideas and upselling opportunities.
3. Prioritise primary research
One of the smartest ways to stretch a CDD budget is to shift away from overused secondary sources and toward high-quality primary research. In the lower mid-market, where businesses often operate in niche markets, secondary data and generic reports rarely offer enough insight without strong primary research to validate.
Customer interviews, surveys, expert calls and mystery shopping can reveal buying behaviour, price sensitivity and switching dynamics - the commercial levers you need to understand. Adding respondents to a primary research programme is almost always better value than layering in extra desk research.
Choose partners who can demonstrate high quality research methodology.
4. Choose boutiques over big brands
Well-known consultancy names come with high overheads. For sub-£20 million deals, those fees are often hard to justify. A boutique with the right credentials and research expertise can often deliver more valuable output at a lower cost.
What matters is not brand recognition but relevant track record and strong analytical thinking. Leaner firms tend to focus on senior delivery, tighter scopes and fewer unnecessary extras.
Often highly capable boutiques are under-marketed and overlooked but they may be exactly the partner you need.
How Kingsgate can help
Effective CDD in the lower mid-market does not mean doing everything. It means focusing on the areas that matter most and building confidence in the decisions that will shape the first year of ownership.
At Kingsgate we help private equity firms get more value from their diligence spend. Our approach is built around tight scopes, strong hypotheses and actionable insights that support both the deal and the value creation plan.
Thanks to our lean experience-driven model, we deliver more robust primary research and higher call volumes often at significantly lower cost than traditional firms.
If you are looking to improve the return on your diligence spend we would love to talk.
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