The money gets spent, the firm has a name, and the deliverable still comes back disappointing. I have talked with enough PE peers to know the complaint is always the same one underneath. Nobody knows how to run a vendor.
Later I started writing my own tooling with AI, and a pattern showed up. Hand it a vague instruction and even a smart model returns correct nonsense. It will not stop and ask what you actually want. It hands you something that looks finished.
Vendors are no different. A loose brief does not buy you a reliable result, and expecting the vendor to quietly fill the gaps you never mentioned is a bet you will usually lose.
What you outsource is the hands. It is never the responsibility sitting on the manager.
The reason you get to lead is that you have to know how to do the work yourself. The internal team needs the depth to run its own analysis, with real expertise across finance, legal and business, so that you have the eye to tell what is true from what merely sounds true.
Knowing how to do it is not the same as doing all of it. The lead stays with you, and the vendor is your labor, there to execute the specific instructions you have broken the work into. Outsourcing the hard, thankless tasks you know how to do, are capable of doing, but have no time or appetite for, that is what lean actually means.
If you cannot do it, you cannot supervise it. You have no way to tell whether the work went deep or shallow, and in the end you hold a stack of thick reports, feeling that due diligence happened and also that nothing happened at all.
If you believe everything a vendor concludes, it only means the deal does not matter much to you. Respect is a separate question, and having paid for their brains, you had better use them.
So how should you frame the ask. An average person states requirements like a wish, one line about running due diligence and checking whether the numbers are real, and the whole project goes out the door.
A stronger operator does the homework first, before the vendor ever shows up. On an unfamiliar sector, you study up, get the business logic roughly clear, write out the hard questions, and only then bring the team in.
Meetings have to come early. You list what you already understand and what you still do not, item by item, then hear what the vendor wants to add, and agree an execution plan together. If you do not say it up front, you find out the direction was wrong halfway through, and the whole exercise was wasted.
The outline and the output format get aligned up front too. What the final deliverable covers and how it is presented has to be confirmed on paper.
Volume targets get fixed in numbers. How many upstream and downstream counterparties get visited, how large a voucher sample, how many contracts collected, all of it written as hard figures.
Targets that are not quantified come down to everyone’s conscience. With no number as a floor, each person carries a different idea of how deep due diligence should go, and the samples that finally arrive are too thin to support a business judgment.
What we want is the complete working record, not a report, because a report can be assembled without ever going to the site, using public data and common sense. Site photographs, work videos, scanned vouchers and interview recordings all get filed, so that every claim can be retrieved and traced.
Across the whole process, gut-feel conclusions get ruled out. Subjective judgment gets labeled honestly as speculation, and factual judgment has to stand on the working papers.
Someone has to follow the process from start to finish. You cannot hand the project over and go quiet until the delivery date, when you finally turn up to inspect the goods.
If the vendor says three weeks, you do not wait three weeks for the next meeting. Online progress at least twice a week, clearing whatever is stuck on site while it is still small.
When they go on site visits, someone from our side goes along, both to help coordinate with the portfolio company and to watch whether the work on the ground is solid.
Do all of this properly and the vendor will move at your pace.
But there is one line that does not move. Judgment cannot be outsourced. A consultancy may be more specialized than you in some narrow field, and the right move is to use that strength for what it is.
Investing is a composite thing, and the complete investment case is always where we are the professionals, because we are the ones who take the decision to investment committee and we are the ones who carry the consequences. No vendor should understand the deal better than we do.
Do not imagine the big-name firms are more sophisticated than they are. Those teams are not as strong as you think. Finish your own desk preparation, state the requirements in specific terms, hold the process tightly, keep the working papers complete, and the ball does not get dropped.
Based on personal operating experience. Cases are anonymized.