Preparing for Due Diligence
Most due diligence advice focuses on documents. Contracts. Financial records. Strategy decks.
That's the easy part. Most companies get those right because they have to.
What investors actually care about is harder to document: team, market, product. In that order.
Documents can show your market opportunity and your product. But the team? That's where things get interesting.
What investors really want to know
Every investor has the same fear: a hidden crack in the leadership team that splits open when things get hard. And things always get hard.
They're not evaluating individual founders. They're trying to figure out whether this group of people can work through problems together without imploding.
No document predicts that. But you can show evidence that you've thought about it.
Two things that matter
Team composition
Good leadership teams have different types of people doing different types of work. Some people are good at generating ideas. Others are better at planning. Some drive execution. Others catch the details everyone else missed.
Same goes for personalities. You want decision-makers and collaborators. Steady operators and critical thinkers. If everyone thinks the same way, you'll miss obvious problems.
The useful part isn't just having diversity—it's knowing about it. When each person understands their own strengths, weaknesses, and stress triggers (and those of their colleagues), the team gets more efficient and has fewer unnecessary conflicts.
Team cohesion
Patrick Lencioni's "Five Dysfunctions of a Team" is still the best model I know for this.
Trust comes first. Not professional reliability—actual vulnerability. Can people admit mistakes without fear? From trust, healthy conflict becomes possible. If people trust each other, they can argue about ideas without it becoming personal.
Commitment requires conflict. If opinions aren't aired and debated, people don't really buy in. Accountability requires commitment—hard to hold people to standards they never agreed to. And results focus ties it together: team success over individual wins.
These build on each other. Skip one and the whole thing wobbles.
Tools that help
A few concepts worth knowing.
Working Genius identifies six types of work talent: Wonder (questioning), Invention (creating solutions), Discernment (evaluating), Galvanizing (inspiring action), Enablement (supporting), and Tenacity (finishing). Helps teams understand who's naturally suited to what.
The Birkman Method measures personality, motivations, and stress behaviors. More comprehensive than most personality assessments. Useful for understanding why certain people clash under pressure.
These tools are fine, but they're just tools. The value comes from someone who knows how to use them—a coach or facilitator who can turn reports into real conversations about how the team actually works.
Making it count for investors
The advantage of using recognized models is credibility. There's something concrete to point to: reports, assessments, certificates.
Include these in your due diligence materials alongside the standard documentation. Show the work you've done on team composition and cohesion. Show the follow-up actions you've committed to.
What investors want to see isn't perfection. It's evidence that you know where your team is strong, where it's weak, and that you're actively working on it.
That's harder to fake than a polished strategy deck.
