Key Takeaways
- Due diligence is not about finding reasons to kill a deal. It is about repricing risk accurately.
- The data room is a signal about how the company is run, not just what it contains.
- Founders who hide problems during diligence are delaying problems that will cost more later.
There is a version of due diligence that most people imagine: a team of analysts reviewing spreadsheets, lawyers checking contracts, someone calling customer references from a list the company provided. That version exists but it tells you almost nothing you did not already suspect.
The due diligence that actually matters is faster, messier, and more personal. Saim Abbasi has been through it from three directions: as the company being acquired, as an operator during a public company acquisition, and now as an investor at Iron Key Capital conducting it on behalf of the fund.
The Data Room Tells You How the Company Thinks
Before Saim reads a single number in a data room, he looks at how the data room is organized. Is it clean and logical? Are documents named in a way that suggests someone maintains them regularly or does it look like everything was dumped in the night before the investor asked? Are there version dates on financial models?
The data room is a proxy for operational discipline. A founder who runs a chaotic data room is almost always running a chaotic finance function. That is not disqualifying, but it tells you what you are buying into and what work needs to happen post-investment or post-acquisition to get the infrastructure right.
Customer Calls: Beyond the Reference List
The standard approach is to call the customers on the list the company provides. Those calls are almost always positive, which is why they are on the list. The useful calls are the ones Saim finds independently. LinkedIn searches for people who listed the company as a tool they use. Former customers who switched away. Employees who left in the last 12 months and will talk candidly.
The pattern that matters is not whether the product is good. It is whether the company's story about the product matches what customers and former employees actually experienced. Gaps between the story and the reality are where real risk lives.
What Founders Get Wrong
The most common mistake founders make during diligence is hiding a problem they expect will come up. An unpaid tax liability. A key employee who is about to leave. A customer concentration issue that looks worse than the aggregate numbers suggest.
Every one of those problems comes out eventually. The question is whether it surfaces during diligence, when the deal can be repriced around it, or after close, when it becomes a dispute. Saim Abbasi's advice to every founder going through a process: disclose early, disclose clearly, and come with a plan for how it will be handled. Buyers can absorb known risks. They cannot forgive hidden ones.
"The due diligence process reveals more about a founder's character than their pitch deck ever will."