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Due Diligence Questionnaire Definition and 3 tips on how to run a successful one

Everything you need to know about a due diligence questionnaire definition and how to run a successful questionnaire

GrapeData
Sep 9, 2022

Due Diligence Questionnaire Definition

A due diligence questionnaire definition can be a hard one to explain. This guide aims to simplify a due diligence questionnaire definition and give tips on running a successful one. 

A due diligence questionnaire is also sometimes referred to as a survey for due diligence. In businesses, it forms an integral part of B2B market research. Individuals and businesses alike conduct due diligence in everyday life. For example, individuals conduct due diligence when making a big purchase. Consider a person who wants to buy a luxury car, they will check the car’s price, and features and compare it to other vehicles available on the market. In simple terms, evaluating a decision from all angles is nothing but due diligence.

On the other hand, the due diligence process for businesses is a little more complex. Due to the intricate nature of business decisions, companies must create due diligence questionnaires. For instance, many PE firms use due diligence questionnaires to make investment decisions. Currently, ESG investing (including environmental and social considerations in investment decisions) is a hot topic in private equity. The Principles for Responsible Investment has designed a due diligence questionnaire so that investors understand the principles and responsibilities of ESG investing. Use the link above to find out how a due diligence questionnaire is written.

In businesses, a due diligence questionnaire definition varies. However, the basic purpose of the questionnaire remains the same: to evaluate aspects of a new market, business, or product line to make an investment decision. Decision makers such as C-level executives use due diligence questionnaires to make data-driven decisions. Typically, a questionnaire only forms one part of the bigger picture of conducting commercial due diligence. Other processes involved in due diligence include conducting interviews, creating focus groups, and generating reports based on the data gathered. Having discussed the due diligence questionnaire definition, we’ll now explore 3 tips on how to run a successful questionnaire. 

A Due diligence questionnaire definition isn't enough: Dig Deeper

A due diligence questionnaire must be thorough and give decision-makers enough information to make a decision. Each questionnaire will be unique according to the nature of the project. Additionally, different types of DDQs (Due Diligence Questionnaires) will produce different results. Below we have collected 3 tips that will help your business conduct a successful questionnaire:

1. Create a checklist for your due diligence questionnaire

Having a checklist of questions to ask for due diligence is a helpful start for your business. First, you need to determine the purpose of forming the due diligence questionnaire. According to the purpose of your project, a due diligence questionnaire definition can be developed. For instance, if you are a PE firm that wants to conduct investment due diligence, the questionnaire will look very different from a firm that conducts vendor due diligence. Therefore, having a checklist of questions specifically for your project will prove useful. In the case of the PE firm question categories can include organisational structure, IP rights, and environmental analysis. Whereas, in the case of vendor due diligence question types could include vendor business processes, vendor policies, and more. 

For context, investment due diligence refers to an evaluation done by PE firms whenever they want to make an investment. On the other hand, vendor due diligence refers to the process of handling supplier relationships. Whenever a business chooses a supplier, they conduct a certain check on the supplier’s processes and policies to ensure that they are a good match. 

2. Perfect the launch steps of your due diligence questionnaire

To perfect your questionnaire, you can leverage survey programming and scripting services. Typically, firms spend a lot of time on the launch steps of a due diligence survey. Survey programming and scripting services help improve the accuracy of the data in the questionnaire. Questions can be programmed to include the required information for the questionnaire. Similarly, questionnaires can be scripted so that the questions are translated into the right language. Programming and scripting help enhance the due diligence survey questionnaire definition. 

Additionally, you can also conduct a pilot test for your due diligence questionnaire. The pre-launch will ensure that you get the correct information. Essentially, a pre-launch will be sent out to only a small number of respondents. Through this pre-launch, you can get an idea of the actual sample size for your due diligence questionnaire. You can think of a pre-launch as a ground test to see how people respond to your survey. In this way, you’ll get an idea of how many people you would actually need for the project. 

If you’d like to read more about survey programming for a B2B survey for due diligence, you can have look at our blog. 

3. Gather high-quality respondents to run your due diligence questionnaire

Survey respondents form a crucial part of your survey for due diligence. One mistake that companies tend to make is using a static list of survey respondents. Instead, you should be customising survey respondents to each project. Having a static list of survey respondents is detrimental for several reasons. First, a static list of respondents tends to produce low-quality data. Using the same list of respondents for each questionnaire doesn’t work as each project is unique. Second, B2B respondents are harder to find in a static list of respondents. For context, B2B respondents are B2B customers such as employees, C-level execs, and managing directors. These respondents are pressed for time and therefore are harder to recruit for a questionnaire. 

Lastly, technological advances such as AI and Geolocation tools have made it possible to custom recruit respondents. Tools such as AI and IOT have brought in sustained innovation across industries. Specifically for market research, they have simplified the process of data collection and analysis. Therefore, to find your custom set of respondents, we recommend leveraging these technologies in your business. 

At GrapeData, we focus on finding niche B2B populations using these tools for your questionnaires. Our AI and geolocation checks ensure that you get the best possible results for your questionnaire. 

Where to find help for running a due diligence questionnaire? 

Running a due diligence survey can be a difficult task but choosing a partner can make the process easy. Data collection panels like us can facilitate due diligence questionnaires. For instance, we recently partnered with a leading PE firm to reshape its ESG strategy. Our client wanted to align their investing strategy with ESG investing but they needed PE experts to share industry knowledge. In fact, Forbes reports that ESG investments doubled from 2020 to 2021 and this positive trend continues to grow this year. In line with this growth, we partnered with our client to custom-recruit PE experts. Additionally, we also helped them design a due diligence questionnaire definition for their project. 

With the help of our research, our client diversified their investment portfolio. They were able to determine the value of ESG investments for their company. Moreover, they developed a strategy for future investments in ESG. Read more about the case study here

In this manner, due diligence surveys can be useful for many purposes. Every industry; be it PE or retail has use for due diligence surveys. Data collection panels can streamline the process of developing the questionnaire. They can help your business find the perfect target audience for your project. Partnering up with an online panel provider can optimise your questionnaire because of the services that they offer. To name a few, these include survey programming and scripting and custom recruiting high-quality respondents. 

We know that finding the right partner to conduct this survey can also be challenging. At GrapeData, we aim to make this process as easy as possible for you. We prioritise high-quality data to make sound data-driven business decisions. Our aim, as a tech-enabled survey solution has always been to prioritise quality data. If you’d like to know more about the work that we have done contact: sales@grape-data.com