Private Equity M&A: evaluating a target’s growth potential in the digital age

Identifying disruptors vs. disrupted – due diligence in the digital era

The first step in any M&A process is to build an understanding whether a target is a disruptor or disrupted.

• Disruptors leverage technology, data, and new business models to challenge incumbents & stay ahead of competition

• Disrupted companies often struggle with outdated tech stacks, siloed data, or declining customer engagement

A comprehensive commercial due diligence focused on customers & proposition, technology & data, and organization & way of working can reveal whether a company is positioned for future growth or will be fighting to stay relevant. This perspective is especially critical in fast-changing industries like retail, consumer, B2B, tech, and business services.

👉 Learn how SparkOptimus supports investors in assessing digital disruption as part of CDDs here.

Customer & Proposition – sharpening the commercial lens

Traditional commercial due diligence focuses on market size and financials, but in the digital age it must also test the robustness of the customer proposition. Investors need to evaluate:

• Company profile & performance – What is the scale, business model, revenue mix, customer base, and repeat share?

• Market size & trends – How large is the addressable market, how fast is it growing, and what disruptive shifts are shaping it and where is value being captured across the chain?

• Customer proposition & USPs – What makes the proposition stand out versus competitors in terms of price, assortment, services, delivery, or experience?

• Business plan & uncertainties – How realistic is the plan, what assumptions underpin it, and what are the critical uncertainties to test?

These “intangibles” often determine whether a company has real digital growth potential or is simply surviving on legacy (brand) strength.

Technology & Data – enablers of speed and scalability

Financials & commercials alone don’t show whether a company can grow in the digital age. Technology and data determine speed, resilience, and insight. Investors should evaluate:

• IT architecture & landscape – What is the IT architecture, and how futureproof and scalable is it? Key points: modularity, connectivity, use of standards vs differentiation, vendor landscape, reliance on legacy systems

• Data & analytics architecture – How modern and scalable is the data landscape? Consider data warehouse capacity, data management processes, dashboarding/tooling, and the ability to provide data services across the business

• Business–IT collaboration – Is there a joint product vision? How do business and IT collaborate on budgeting and prioritisation? Look for alignment on goals, funding transparency, and speed of delivery

• Roadmap viability – How realistic is the product roadmap? Are planned digital customer-facing functionalities feasible, and can the current team and setup deliver them at pace?

These factors reveal whether technology and data are positioned to support growth and innovation, or whether they will constrain the investment case.

4. Organization & Way of Working – turning plans into outcomes

Strong growth depends not only on a strategy, but also on the people, structures, and modern ways of working that execute it. Investors should evaluate:

• Organizational setup & cross-functionality – What is the structure, and how well does it enable fast decision-making and professional reporting?

• Conversion machine capabilities – To what extent are key digital and commercial functions (marketing, CRM, CRO, analytics, product management) sufficiently covered?

• In-house vs outsourced – Which critical functions are retained in-house, and which are outsourced? Is this intentional and sustainable?

• Leadership & culture – Does the leadership team foster autonomy, experimentation, and continuous improvement?

Answers to these questions show whether the company can reliably deliver on its priorities, or if execution risks will diminish returns.

In today’s disrupted market, evaluating a target’s digital growth potential is no longer optional, it’s central to the investment case. For private equity, success depends on looking beyond traditional commercial due diligence and testing three critical lenses:

• Customer & Proposition – is the company’s offer differentiated and defendable, with evidence of real customer demand and loyalty?

• Technology & Data – are the platforms and data foundations modern, scalable, and aligned with the growth plan?

• Organization & Way of Working – does the structure, leadership, and culture enable fast, disciplined execution of priorities?

Those who apply this lens can underwrite value creation more accurately, avoid execution pitfalls, and position their assets for superior growth and resilience in the digital age. This perspective also sharpens buy-and-build strategies: targets with scalable tech and adaptable organizations make stronger platforms for bolt-ons and faster integration of new capabilities.

👉 Want to learn how SparkOptimus helps private equity firms apply this lens in diligence and buy-and-build plays? Get in touch with our team.

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Leading companies are scaling digital successfully by aligning leadership, culture, and execution — not just technology. Contact SparkOptimus to see how we can help your organization unlock growth and resilience through digital.