Operational and Commercial: Due Diligence Beyond the Numbers

The split between what’s visible and what’s hidden often defines success. In Australia, when you’re looking at a major business transaction, it’s easy to fall into the trap of spreadsheets and neatly formatted financial statements. The numbers gleam, the projectioThe split between what’s visible and what’s hidden often defines success.

In Australia, when you’re looking at a major business transaction, it’s easy to fall into the trap of spreadsheets and neatly formatted financial statements. The numbers gleam, the projections smile at you, and suddenly it feels like the safest bet in town. But that story? It’s only half the truth. The real picture, the hidden twists, and lurking risks live in the operational and commercial fabric of a business.

This is what lies beyond the balance sheet, and ignoring it is a mistake that can sting far worse than any cold spreadsheet ever could.ns smile at you, and suddenly it feels like the safest bet in town. But that story? It’s only half the truth. The real picture, the hidden twists, and lurking risks live in the operational and commercial fabric of a business.

This is what lies beyond the balance sheet, and ignoring it is a mistake that can sting far worse than any cold spreadsheet ever could.

Only looking at the numbers? That’s like buying a house from glossy photos online. Sure, the floors gleam, the rooms look perfect, sunlight everywhere. Feels right. But the cracks in the foundation, the wiring ready to spark, the neighbours practising bagpipes at three a.m.? Totally invisible.

Businesses hide the same kind of stuff. Cultural fractures, processes stretched thin, customer relationships barely holding together, they rarely appear in an audit. When they do show up, it hits the bottom line hard.

Financial models are seductive. They promise logic, clarity, and a future paved in profit. But what if that promise rests on a shaky assumption? What if the production volumes it predicts are impossible given the existing equipment? What if it presumes customers will stick around even though a competitor has just opened a shiny new branch nearby?

Operational due diligence drags those models into reality. It’s about living inside a business for a moment, noticing the tiny things that keep it breathing, asking the brutal questions that make people squirm, and spotting the hidden frame holding it all together. Not a checklist. Real digging. Messy, uncomfortable, necessary.

Questions to consider:

• Can the business actually produce at the volumes it claims?
• Will its customer service hold when things get busy?
• Are supply chains robust or a fragile chain of dominos?
• Are workplace laws under Safe Work Australia and Fair Work Act compliance genuinely followed?

If any of these points wobble, your “perfect” deal might be a fancy logo hiding a pile of problems.

Then there’s the outward-looking part: commercial due diligence. No company exists in isolation. Spreadsheets can’t show the real currents. Customers, competitors, suppliers, they tug a business in ways you won’t see in a chart. Commercial diligence gets into that chaos, finds the spots that actually matter, shows if a company can fly or just cling on.

Growth feels like a rush. You see the deal, the possibilities, and it’s easy to let your imagination run wild while the reality waits quietly in the corners. But facts have a way of humbling optimism. Here’s where commercial diligence becomes your reality check.

Key points for the Australian market:

• Customer Health: Who truly drives revenue? Are contracts compliant with Australian Consumer Law? Are relationships stable or held together by a thread? A reliance on one or two major clients is a massive risk. Knowing if customers are loyal, happy, or likely to leave is priceless
• Market Position: Is the business a price leader, an innovator, or just another face in a crowded market? ACCC regulations make anti-competitive practices illegal, so understanding real market positioning is essential
• Industry Trends: Is the industry growing, or shrinking into obsolescence? Buying into a dying sector can erase your profits faster than a mispriced spreadsheet ever could

Ignoring these signals is like sailing into a storm because the sea looked calm when you left. Eventually, the reality hits. The only question is whether you are prepared when it does.

True diligence goes past supply chains and polite conversations with clients. It dives into the subtle, interconnected snares that can collapse a business after acquisition. Think of it as business forensics with teeth.

Culture matters. Toxicity, lethargy, fear of speaking up can silently eat productivity and innovation, no matter the money poured in. Key personnel matter. A business reliant on a few indispensable people walks a high wire. Lose them, and you lose institutional knowledge.

Then there’s technology. A business might be profitable today, but if it runs on unsupported or outdated software, you inherit a ticking capital expenditure bomb. In Australia, this intersects with privacy laws and the Notifiable Data Breaches scheme. Overlook this, and you face costs, compliance headaches, and legal exposure.

When operational or commercial missteps wreck a deal, the fallout is bigger than lost money.

Reputation suffers. Investors, partners, and the market notice a bad acquisition. Management gets sucked into firefighting instead of pursuing growth. Time, energy, and opportunity slip away. Momentum stalls. Strategic plans get derailed, competitors surge ahead, and every delayed decision costs more than the initial loss.

Viewing operational and commercial diligence as optional is a gamble few Australian business leaders can afford. It is insurance against catastrophic failure.

Spreadsheets don’t tell you if your sales team feels motivated, whether your factory can cope with demand, or if your customers actually want to stick around. Financials are history. Operational and commercial due diligence maps out the future. It converts abstract investments into tangible, predictable outcomes. It separates wishful thinking from certainty and allows you to move forward with confidence.

In Australia, with its specific compliance rules like the Fair Work Act, Safe Work obligations, ACCC oversight, and privacy laws, overlooking these realities is an expensive gamble. If you’re ready to see past the numbers and get to the heart of your next acquisition, we at Zimsen Partners can provide the clarity you need.

Zimsen Partners turns complexity into clarity, revealing opportunities and risks that others miss and making sure every decision lands where it should. With insight that cuts through noise and precision that protects value, working with us transforms an acquisition from a gamble into a confident move forward.

Numbers can charm you, but operational realities will make you pay attention.