the-due-diligence-call

The Due Diligence Call Skill

Founders present metrics; analysts reconcile them. The due-diligence call is where "150% net revenue retention" meets "walk me through the cohort math," and where numbers that were directionally fine become credibility problems because they don't tie to each other. This skill runs that call early — an analyst who has already read the data room, asking the questions the spreadsheet raised — then writes the internal memo and debriefs on the difference between numbers that need better presentation and numbers that need a better business. Honesty is structural: the exercise finds the wobbles so they can be fixed or disclosed, never dressed.

What This Skill Produces

• The transcript — 12–18 exchanges, with the analyst's private note after each answer
• The internal memo — what the analyst tells their partner/corp-dev lead: proceed / proceed-with-reps / pass, with the real reasons
• The debrief — every wobble sorted: presentation-fixable / disclose-and-explain / fix-the-business

Required Inputs

Ask for these if not provided:

• The metrics as presented — the deck's numbers: revenue, growth, retention/NRR, CAC/LTV, pipeline, burn — whatever's claimed
• The underlying reality — how each is actually calculated, the known soft spots, anything that wouldn't survive a definitions question. The simulation only works on the truth; the analyst probes exactly where definition and headline diverge
• The context — acquisition vs. fundraise (different paranoias: retention-of-what-they're-buying vs. growth-story integrity), stage, and who's on the call
• The dread number — the metric they hope nobody recomputes; it gets recomputed

Framework: The Analyst's Moves

1. Reconciliation beats interrogation: the analyst's core move is asking for the same number two ways ("NRR is 150%? What was that cohort's gross churn?") — inconsistency between answers, not any single answer, is what kills deals.
2. Definitions are the trapdoors: "active user," "recurring," "gross margin," "pipeline" — each gets a "how exactly do you define that?" and the honest definition is compared against the headline's implication.
3. The bridge questions: every impressive metric gets bridged to cash ("if retention is that strong, why does the burn say otherwise?"). Metrics that can't reach the P&L are marketing.
4. Concentration and cliffs: top-customer revenue share, the contract renewal dates, the one channel behind CAC — the analyst hunts single points of failure the averages hide.
5. The honesty asymmetry: a soft number disclosed with its story ("NRR is 118% excluding our one enterprise expansion; with it, 150% — here's why we quote both") builds trust; the same number discovered costs the deal premium. The debrief's whole job is moving items from discovered to disclosed.

Output Format

DD Call: [company — context, analyst for whom]

> Simulation — a plausible adversarial reading, not a prediction.

Transcript

[The call, grounded ONLY in supplied numbers; where a metric can't be reconciled from what was given, the analyst notices — that's the finding. Analyst's note: after each exchange.]

The Internal Memo

[To: partner/corp-dev. Recommendation with the real reasons — including the difference between what was said on the call and what the memo flags.]

Debrief — out of character

| Wobble found | Category | The move |

|---|---|---|

| … | Presentation-fixable | Recompute and present both definitions side by side |

| … | Disclose-and-explain | The disclosure sentence, drafted |

| … | Fix-the-business | No sentence fixes this; here's what would |

[Plus: the reconciliation pack to build before the real call — the 5 numbers that must tie]

Quality Checks

• [ ] Every analyst question traces to a supplied number or a noticed absence
• [ ] At least one metric is asked for two ways, and the tie-out is checked
• [ ] Definition questions hit every headline metric
• [ ] The memo's real reasons differ from the call's polite surface where realistic
• [ ] The debrief drafts actual disclosure sentences, not advice to "be transparent"

Anti-Patterns

• [ ] Do not help dress numbers — the output moves soft spots to disclosed, never to hidden; requests to conceal end the exercise
• [ ] Do not invent metrics to attack — absences and non-ties ARE the findings
• [ ] Do not let charisma answers pass — the analyst follows up on vibes with arithmetic
• [ ] Do not conflate the two contexts — acquirer paranoia and investor paranoia probe different organs
• [ ] Do not stay in character in the debrief