Almost 60% of deals fail because of poor due diligence that didn't identify critical issues, according to Bain & Company research. The problem isn't lack of effort. Investment teams are drowning in data, burning weeks on logistics, and paying research prices for what amounts to access.

The gap sits between what the deck says and what the market actually thinks.

Secondary research tells you what the world already knows. Primary research reveals what matters for your specific thesis. When you're running concentrated books with tight timelines, that difference shows up in your P&L.

This guide outlines the methodologies top-tier strategy consulting firms and private equity deal teams use to conduct investment-grade primary research due diligence. You'll see how to gather original intelligence directly from sources, validate investment theses, and uncover hidden risks before they become write-downs.

Why Primary Research Matters More Than Ever

The investment landscape has shifted in ways that make primary research essential, not optional.

Private equity holding periods hit 8.5 years in 2024, more than double the 4.1 years observed in 2007. When you're holding assets twice as long as historical norms, getting the initial diligence right becomes critical. There's less room for error when conviction, sizing, and timing decisions must hold up for nearly a decade.

Add-on deals now represent 74% of all PE transactions, up from 59% in 2014. Investment teams aren't conducting diligence once at platform acquisition. They're running repeated primary research projects for bolt-on acquisitions throughout the holding period.

The cumulative analyst time and research spend adds up fast.

Meanwhile, global PE dealmaking rose 14% to $2 trillion in 2024, making it the third-most-active year on record. Buyout investment value increased 37% year over year to $602 billion, excluding add-ons. As deal flow increases, the temptation to rush diligence grows.

But macro uncertainty and geopolitical complexity make investment-grade primary research more important than ever.

Phase 1: Strategy & Scoping

Primary research starts before you talk to anyone. You need a clear hypothesis and specific questions that, when answered, will move your conviction on the deal.

Define Your Key Intelligence Questions (KIQs)

KIQs are the 3-5 critical questions that your investment decision depends on. They should be specific enough that a clear answer changes your view on valuation, risk, or deal structure.

Weak KIQ: "Is the market growing?"

Strong KIQ: "Will the target's top 10 customers increase spending by 15%+ over the next 18 months, and what would cause them to switch providers?"

Your KIQs should map directly to your investment thesis. If you're underwriting revenue growth, you need KIQs about customer retention and wallet share. If you're betting on margin expansion, you need KIQs about pricing power and cost structure.

Map the Stakeholder Ecosystem

Draw concentric circles around your target asset:

Inner circle: Direct customers, suppliers, employees

Middle circle: Competitors, channel partners, former employees

Outer circle: Industry analysts, regulators, adjacent market participants

Each layer offers different perspectives. Customers tell you about satisfaction and switching risk. Competitors tell you about market positioning and pricing dynamics. Former employees tell you about operational reality versus the management presentation.

You need voices from all three circles to triangulate truth.

Determine Research Methodology

Choose between interviews, surveys, or a combination based on what you need to learn:

Interviews work best when: You need depth over breadth, you're testing complex hypotheses, or you need to probe unexpected answers.

Surveys work best when: You need quantitative validation across a large sample, you're measuring specific metrics (NPS, pricing sensitivity), or you need statistical confidence.

Most investment-grade diligence uses both. Interviews generate hypotheses and uncover nuance. Surveys validate those hypotheses at scale.

Phase 2: Sourcing Experts

Finding the right voices determines whether your research moves conviction or wastes time.

Expert Networks: Know What You're Buying

Expert network companies charge clients rates that often start at $1,000 per hour, with the industry having grown to $1.9 billion. Elite experts command $1,000 to $5,000+ per hour.

But the sticker price dramatically understates the true cost.

When you factor in the 40% miss rate and analyst time spent on logistics, vetting, and note-taking, the real cost per useful insight approaches $2,000. You're paying research prices for access, then doing all the actual research work yourself.

81% of investment professionals believe that talking to experts is legitimate and value-adding. The problem isn't whether expert insights matter. The problem is how they're delivered.

When you use expert networks, verify that:

• The expert profile matches your specific question, not just the industry

• The expert has recent, direct experience (within 12-18 months)

• The expert isn't recycled from a shared database your competitors already tapped

• The pricing model aligns with outcomes, not just call volume

Cold Outreach: The Underused Alternative

LinkedIn, industry conferences, and direct sourcing often yield better experts than networks. The experts aren't monetizing their knowledge through a middleman, which means they're more likely to give you unfiltered views.

Your outreach should be specific and respectful:

"I'm conducting research on [specific topic] for an investment analysis. I'd value 20 minutes of your perspective on [specific question]. This is not a sales call, and I'm happy to compensate you for your time."

Response rates sit around 15-20% when your targeting is tight. That's enough to build a panel of 10-15 experts for most projects.

Internal Networks and Warm Introductions

Your firm's portfolio company executives, limited partners, and advisory board members often know the best voices in any given market. A warm introduction from a trusted source dramatically improves both response rates and candor.

Track your expert sources in a CRM. The best experts get reused across multiple deals in the same sector.

Phase 3: Execution — The Interview Playbook

How you structure and conduct interviews determines whether you get rehearsed talking points or investment-grade intelligence.

The Blind Interview Technique

Never disclose the target company name upfront unless absolutely necessary. Instead, describe the business model, size, and market position in neutral terms.

"I'm researching a $50M revenue SaaS company in the HR tech space that serves mid-market customers. They've been growing 30% annually."

This approach eliminates bias and gets you the expert's genuine view of the market dynamics, not their opinion of one specific player.

You can reveal the target later in the conversation once you've established baseline market views.

Structured Interview Framework

Your interview guide should follow a funnel structure:

Opening (5 minutes): Establish the expert's background, role, and direct experience with the relevant market or customer segment.

Market context (10 minutes): Broad questions about market trends, competitive dynamics, and customer behavior patterns.

Thesis testing (20 minutes): Specific questions tied to your KIQs. This is where you validate or invalidate your investment assumptions.

Probing (10 minutes): Follow unexpected answers, ask for specific examples, and push on vague claims.

Closing (5 minutes): "What question should I have asked but didn't?" and referrals to other experts.

Question Design Principles

Ask open-ended questions that force specificity:

Weak: "Is customer satisfaction high?"

Strong: "Walk me through the last time you evaluated whether to renew or switch providers. What factors drove that decision?"

Weak: "Are they gaining market share?"

Strong: "When you lost deals in the past year, who won them and why?"

The best questions make the expert tell a story with names, numbers, and timelines. Stories are harder to fake than opinions.

Note-Taking and Documentation

Record interviews when legally permissible and with explicit consent. Transcripts catch details you miss in real-time and create an audit trail for compliance.

Your notes should capture:

• Direct quotes that support or contradict your thesis

• Specific data points (customer counts, pricing, churn rates)

• Unprompted concerns or red flags

• Referrals to other experts or data sources

Tag each insight with the expert's profile and confidence level. You'll need this for triangulation.

Phase 4: Synthesis & Triangulation

Raw interview notes don't move conviction. You need to synthesize findings into clear, defensible conclusions.

Quantitative Analysis: The NPS Framework

When you've interviewed or surveyed customers, calculate a Net Promoter Score:

• Promoters (9-10): Would actively recommend the product

• Passives (7-8): Satisfied but not enthusiastic

• Detractors (0-6): Unlikely to recommend or actively dissatisfied

NPS = % Promoters - % Detractors

An NPS above 50 indicates strong customer loyalty. Below 0 signals serious retention risk. This metric gives you a quantifiable read on "soft" factors like brand strength and customer satisfaction.

Qualitative Synthesis: Voice of the Customer Matrix

Build a matrix that maps themes across experts:

[Table structure:]

Theme | Supporting Evidence | Contradicting Evidence | Confidence Level

Example:

Pricing power: 6 of 8 customers said they'd accept a 10% price increase | 2 of 8 said they're actively evaluating cheaper alternatives | Medium-High

This format forces you to acknowledge contradictory data and assign confidence levels based on source quality and consistency.

Triangulation Across Source Types

The strongest conclusions come from multiple, independent sources:

Gold standard: Customers, competitors, and former employees all confirm the same insight

Caution flag: Management says one thing, customers say another

Red flag: You can't find any independent source to validate a key management claim

When sources conflict, weight them by proximity to ground truth. A current customer's view on retention risk matters more than an industry analyst's opinion.

Writing the Primary Research Memo

Your memo should answer each KIQ with:

• Clear conclusion (validated, invalidated, or inconclusive)

• Supporting evidence with source attribution

• Confidence level and key assumptions

• Implications for valuation, deal structure, or investment decision

The memo should be defensible in an IC meeting. If a partner asks "how do you know that?" you should be able to point to specific expert quotes and triangulated data.

Phase 5: Compliance & Risk Management

Primary research carries legal and reputational risk if you're not careful about information sources and documentation.

Material Non-Public Information (MNPI)

You cannot trade on MNPI obtained through expert calls. Period.

MNPI is information that:

• Is not publicly available

• Would likely influence an investor's decision

• Came from someone with a duty of confidentiality

Red flags include:

• Current employees discussing non-public financials

• Board members or executives sharing strategic plans

• Suppliers disclosing specific order volumes or contract terms

If an expert starts sharing information that feels too specific or confidential, stop the conversation and consult your compliance team.

Documentation and Audit Trail

Maintain records of:

• Expert consent forms and conflict-of-interest disclosures

• Call recordings and transcripts

• Payment records and expert profiles

• Research memos with source attribution

These records protect you if a regulator questions your information sources or if a deal goes sideways and someone alleges you missed obvious red flags.

The Red Flag Checklist

During primary research, watch for signals that should trigger deeper diligence or kill the deal:

⚠️ Customer concentration: Multiple experts mention the same 2-3 customers as critical to revenue

⚠️ Pricing pressure: Customers consistently describe the product as commoditized or interchangeable

⚠️ Churn acceleration: Former employees or customers mention recent uptick in cancellations

⚠️ Management credibility: External experts contradict key claims in the management presentation

⚠️ Competitive threat: Multiple sources mention a new entrant or technology shift that management hasn't addressed

⚠️ Regulatory risk: Industry participants expect new regulations that would materially impact the business model

One red flag warrants investigation. Three red flags warrant repricing or walking away.

The Technology Layer: AI as Accelerant, Not Replacement

AI is changing due diligence workflows, but it doesn't solve the core problem.

Increasingly, financial services firms and private equity shops use AI for document due diligence, automating the review of financial statements, legal documents, and contracts. This accelerates the process from weeks to days.

But document analysis tells you what the company says. Primary research tells you what customers, competitors, and channel partners actually think.

That gap is where most deal failures originate.

AI can help you:

• Transcribe and tag interview recordings

• Identify themes across dozens of expert calls

• Flag contradictions between expert views and management claims

• Generate initial interview guides based on your thesis

AI cannot:

• Replace the judgment required to probe unexpected answers

• Verify whether an expert is credible or recycled

• Triangulate soft signals into investment-grade conclusions

• Take accountability for the quality of the intelligence

Use AI to eliminate grunt work. Don't outsource thinking to it.

From Access to Intelligence: The Structural Shift

The primary research industry has optimized for the wrong metric. Expert networks and survey platforms are built around call volume and completes, not correct answers.

That's why you see 50-70% margins, recycled expert databases, and pricing models that reward introductions rather than outcomes.

Investment teams are starting to push back. They're asking why they should pay research prices for access, then do all the actual research work themselves—vetting experts, designing surveys, cleaning data, and carrying compliance risk.

The shift is from buying access to buying finished intelligence.

Finished intelligence means:

• You submit a 10-minute brief with your KIQs

• The provider recruits fresh, correctly profiled experts

• You receive verified, structured outputs ready to drop into IC memos

• You only pay for work that genuinely enhances your decision

This model protects analyst time, cuts the true cost per useful insight, and aligns provider incentives with investment outcomes rather than call volume.

When you're holding assets for 8.5 years and running 74% of your deals as add-ons, the cumulative waste from the middleman model shows up in your returns.

Conclusion: Due Diligence as Competitive Advantage

Primary research due diligence is not a checkbox exercise. It's the process that separates investment professionals who are precisely right from those who are generally informed.

The methodologies outlined here—tight KIQs, blind interviews, triangulation across source types, and investment-grade verification—are what top-tier deal teams use to validate theses and uncover hidden risks.

The 60% of deals that fail due to poor due diligence share a common pattern: they relied on secondary research, management presentations, and surface-level expert calls instead of gathering original intelligence from the right sources.

You can avoid that outcome by treating primary research as a core competency, not a vendor relationship.

When your conviction, sizing, and timing depend on what the market actually thinks—not what the deck says—investment-grade primary research becomes the difference between a write-up and a write-down.