Due Diligence & Portfolio Company Support, Done Right: What PE Firms Miss About Tech Services
Private equity firms are investing tens of millions of dollars, if not more, in custom software development firms using a due diligence and support playbook and talent that doesn’t match the asset class.
Here’s the pattern we see again and again.
The diligence team is either packed with product, not service experts, or service experts from one of the Big 4. They come in asking about annual recurring revenue (ARR), licensing models, ideal customer profile (ICP) alignment, and product-market fit. They understand what good looks like from their past employers, but they have no clue how to build it because they've only ever worked in mature environments.
But these aren’t product companies or mature consultancies.
They’re services firms with maturity gaps. And that changes everything.
If your diligence questions and value-creation teams don’t match the nature of the business, you won’t get answers that help you drive post-investment value. And yet, very few PE firms, especially those new to the tech services space, adjust their lens accordingly.
Why Product Diligence Falls Short in Services Deals
Tech services companies don’t live and die by ARR. They live and die by delivery.
They scale through credibility, capability, and relationship expansion. Not through recurring license fees.
When you apply a product lens to a services firm, you miss critical signs of both risk and opportunity. You overlook things like:
How strong their delivery foundation actually is
Whether their current team is aggressively chasing account expansion over extension
Whether their tech capabilities are packaged or repeatable
We’ve seen Big 4 advisors parachute into services deals with immaculate-looking models but little understanding of how services companies actually operate. We’ve seen PE firms assign the same CRO or CMO across a services portfolio company and expect similar results. We’ve seen entire acquisitions stumble under the weight of mismatched assumptions.
Services companies require a different level of interrogation and a different kind of plan.
What Real Diligence & Portfolio Company Support Looks Like
At ROI, we perform diligence and company support with a depth and empathy that is hard to find elsewhere. We’ve led tech services companies. We’ve advised them. We’ve helped them mature and grow. We know the difference between a delivery team that can scale and one that is just scraping by. Between marketing that builds a brand and marketing that is simply a website update.
Our diligence includes:
A deep dive into offering clarity: Can the firm explain what it does, and more importantly, can clients?
Maturity assessment across delivery, sales, marketing, and account growth
Analysis of client concentration, growth potential, and whitespace across the current book of business
Evaluation of leadership team capacity and org design in relation to growth goals
Revenue engine teardown to assess what’s working, what’s patched together, and what’s missing entirely
We don’t stop at red, yellow, or green flags. We tell you what to do next. Where to focus post-close. Who to back. What to build. What to fix.
You Can’t Fix What You Didn’t See Coming
A weak diligence or support process doesn’t just put your investment at risk. It derails your entire value creation timeline. You end up spending year one trying to figure out what you really bought instead of growing it.
Smart firms are evolving how they diligence and support tech services companies. They’re going deeper. They’re asking better questions. They’re partnering with experts who have actually built this kind of business.
That’s where ROI comes in.
We help PE firms invest with eyes wide open. And we help portfolio companies grow with intention, not improvisation.
