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10 min

How to create a due diligence survey for private equity

Learn how to create a due diligence survey for private equity

Mar 20, 2023
B2B market research
B2C market research


A due diligence survey is a formal process that helps you to assess the risks involved in investing in a company, project, or property. It can also help you to understand the opportunities available through your investment. Conducting a due diligence survey is particularly important if you're considering investing in something new or unfamiliar, such as private equity funds. Both investors and prospective borrowers use due diligence surveys before entering into any type of agreement with one another. In this article we look at why conducting due diligence surveys is crucial for private equity firms. We'll also look at how to create one for yourself.

Due diligence survey overview

When conducting due diligence on a private equity investment, you will likely want to ask your potential partner a number of questions. These questions should be based on what is commonly referred to as a “due diligence survey.” Many different areas and industries can use a due diligence survey. However, it's most common in the examination of private equity firms by investors with large sums of capital.

The idea behind the due diligence survey is simple. You want to know as much about your potential partner as possible before making any kind of commitment. There are several factors that go into determining whether or not it makes sense for you to invest in a certain company. However, one factor that shouldn't be overlooked is how trustworthy and professional your potential partner appears from the outset. This can only come from asking them some basic questions about themselves! 

A due diligence survey is an important tool for anyone who wants to invest in a business. By asking the right questions and collecting the necessary information about your potential partner, you can make sure that your investment decision is sound.

Why conduct a due diligence survey?

A due diligence survey is an essential tool that any investor conducting a private equity deal should use. Conducting a thorough and organised due diligence survey will help you avoid investment mistakes. At the same time, it will provide you with the information necessary to make an informed decision on your investment.

Due diligence surveys consist of two main parts. One part is a questionnaire portion, which allows the investor to gather additional information about the target company. The second part is an appendix section, which provides reference material for further reading on specific topics that may help inform your decision-making process (e.g., competitor analysis).

The questionnaire portion of the due diligence survey is an essential tool that any investor conducting a private equity deal should use.

When conducting due diligence on a business, there are three main areas to focus on:

-Financials (revenue, profits, and cash flow)

-Legal structure (corporate structure and contracts)

-Business operations (customer base, employees, and competition)

Read other definitions of due diligence here.

Who should complete the survey?

Let's have a look at who can complete a due diligence survey.

  • All members of the investment team, including analysts and associates. The due diligence team is an important part of any private equity fund’s valuation process. So it’s important for all members to understand your model and how you arrive at your conclusions. This is a case when the due diligence survey is external. However, in another type of due diligence survey, the PE firm can conduct a survey across a market or an industry.
  • Senior executives from the company. Many times, senior management is involved in strategic decisions regarding their company's future and may have valuable insight into what makes their business tick. This is especially true if they are familiar with other businesses in your sector.
  • Other interested parties who can provide relevant information about the company being valued (e.g., vendors). These individuals may not be involved in day-to-day operations. However, they still have valuable insights into what makes a business run smoothly or poorly. They could help you identify hidden liabilities that might come back to haunt you.

You may also want to survey other members of the investment team who have no direct involvement in valuation or due diligence but who can provide valuable insight into what makes a business run smoothly or poorly.

How to plan for your due diligence survey

Planning is key to success, and it's no different with due diligence surveys. A thorough plan will ensure that you have all of the necessary information at your fingertips when you begin drafting your questionnaire.

In order to create a solid plan for your due diligence survey, you should keep these things in mind:

  • The process flow from beginning to end
  • The type of questions you ask
  • The target audience for the survey (the investors or the company)

The type of questions you ask is important because it will determine what you are trying to learn from the survey. If you are only interested in how investors feel about your company, then you will want to focus on questions that measure sentiment or opinion. Respondents can answer these types of questions using a rating scale (e.g., 1-10), yes or no answers, or multiple choice answers.

How to create and design the questions for your due diligence survey

The questions you ask in the due diligence questionnaire are critical. The answers will help you assess whether a company is worth investing in. So it's important to ask the right ones.

Here are some tips for creating your due diligence survey:

  • Ask open-ended questions. A good example of this would be "What are your strengths and weaknesses?" rather than "Do you have any strengths or weaknesses?" Open-ended questions give respondents more freedom, which results in better feedback from them.
  • Ask specific questions. Specificity goes hand-in-hand with open-ended questions. If you want an answer that isn't ambiguous or vague, make sure your question is specific enough for them to respond appropriately without confusion or misunderstanding about what you're asking of them. Please note that specificity doesn't necessarily mean complexity. Sometimes simpler can be better! It’s all about finding the balance between asking questions that require multiple sentences. All the while, you should focus on keeping them simple enough so as not to lose anyone along the way. Remember: the goal here is communication; if someone has no idea what you're talking about because there you didn't have enough context within your question then it defeats its purpose entirely!
  • And last but not least: keep it simple. Don’t ask a question that contains multiple parts or asks them to do something complicated like provide a video testimonial. Not only will this make your respondents more likely to drop out before they even start, but it will also skew your results since you won't have as many participants in the first place!

Where to send your due diligence questionnaire?

Now that you have a solid understanding of what due diligence is and how it can benefit your business, it's time to figure out where to send your due diligence questionnaire.

Let's take the help of an example to understand when to send out a due diligence survey. Let's say that a PE firm is interested in an acquisition. Once they have agreed upon an offer price for it, they will be interested in finding out what else might be hiding within their potential acquisition targets' walls. They may also wish to know more about their competition. Additionally, they might want to consider potential risks associated with buying from them or working alongside them. You can collect this information efficiently without disrupting operations too much during this time period, through a due diligence survey.

Conducting a due diligence survey before making an investment

No matter how thorough the due diligence survey is, there will always be certain details that cannot come to light until after you have signed on the dotted line. This is why conducting a due diligence survey before inking the deal is crucial. You need to understand every aspect of your portfolio firm so well that you can know exactly what you're getting into and whether or not it's worth investing in.

The purpose of conducting a due diligence survey before making an investment is twofold:

  • To determine whether or not this company is a good fit for your investment strategy and goals
  • To make sure there are no surprises or legal issues lurking around any corners

The first part is fairly straightforward. You need to make sure that this portfolio firm is in line with your investment strategy and goals, whether it be for profit or social good. In other words, does this deal pass the test of being a good fit for you? If not, then don't waste your time on it.

Analysing your results from your due diligence questionnaire

Once you've completed your due diligence survey, it's time to analyse the results.

The first step is to determine whether or not you have enough data to draw conclusions. If so, look at the responses to each question and compare them with those of similar companies in your industry. If a large number of respondents said "yes" to one particular question and few or none said "yes" in a similar industry, then this may indicate that something unique about your company has led people to respond more favourably than they would otherwise. This can help you identify areas where you need improvement. In addition, it can help you find strengths that you can highlight during pitches or negotiations.

The definition of a good response rate for a due diligence survey varies. However, generally, a good response rate is one where at least 50% of employees who receive it complete it within three weeks of receiving it.

An example of a private equity survey data analysis

Let's understand survey data analysis through an example.

A private equity firm may want to analyse the survey results of its current portfolio companies. The first step in analysing the data is to look at how many responses were received from each company. If there are many more respondents than the number of companies, it could be that there are some companies that didn't respond, or it could be that they just got a lot of responses. Either way, you should note this as an issue moving forward and address it when analysing the data further.

The next step would be to look at what kind of questions the company asked and how people answered them. For example, if there was a question about whether employees felt they were fairly compensated, but most people said they weren't fairly compensated, then this would need to be addressed. It could also mean that there are other issues preventing them from feeling fairly compensated (for example, if their managers were not treating them well).

Another important thing to do is look at which answers respondents chose most or least often. If one answer is chosen more often than another for any given question, then you know that either those employees feel strongly about that answer or else they don’t feel strongly about any other answers.

In this way, the private equity firm can analyse the results of their survey effectively.

Running an effective due diligence survey can help you avoid investment mistakes

Conducting a due diligence survey can help you avoid investment mistakes. The following are some examples of common errors that occur during due diligence and how to avoid them:

  • Not doing enough research. Before making any investment, you should determine if it is viable by conducting thorough research on the company itself and its competitors in the industry. Researching the market will give you a better understanding of what opportunities exist within that industry, which could make for an attractive investment opportunity.
  • Failing to consider all costs associated with acquiring something. When purchasing assets or property, it's important to not only consider their initial purchase price but also any additional costs including fees from vendors or service providers as well as maintenance fees associated with them. You should also look at potential costs related to taxes depending on where they're located (are they in another country?).

Errors in due diligence can occur when you don't have enough information about a company or individual. For example, if you're trying to make an investment in a company that is privately held, you may not be able to get all of the information you need. This is why it's important to thoroughly research your target before making an investment decision.

In order to avoid errors in due diligence, it's important that you:

-Understand how the business works

-Know what the industry is like and how it's changing

-Be aware of any regulatory changes that could affect your investment

Find out how to avoid 8 other common investing mistakes here.


Due diligence surveys are essential to any private equity firm. They help you to understand the market and identify your competitors. They also help get a sense of whether your business idea is viable or not. However, this process can be time-consuming and expensive if done manually. With GrapeData, you can conduct due diligence surveys in an instant. Our survey programming and scripting services ensure that your survey is presented in the best possible manner to our respondents. We have a growing network of 350k+ contributors, you are sure to find the right survey audience that you need. Contact us here to get a conversation going about your survey needs.

Want more resources on due diligence surveys? Check out our post: How to use B2B due diligence surveys in your investment decisions.

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