The CEO Entrepreneur’s Guide to Due Diligence Content & Enterprise Value Success

Updated Fall 2025

Ephor after 25+ years of evaluating, investing, advising and exiting service business models, not only for our own “book”, plus additionally, for our institutional Investment partners, we have gained unique insights into what actually drives enterprise value in B2B Technology Enabled Business service companies, and the importance of the Due Diligence (“DD”) processes to promoting Shareholder Value.

Maximizing Shareholder Value has proven to be dependent on the following business model attributes that must be “emphasized and the focused content” of the DD information Data Room.

Most CEO Entrepreneurs & Leaders focus on growing revenue. Institutional Investors focus on systematic value creation patterns that predict sustainable competitive advantages, and recurring growth in profitability (specifically EBITDA).

Therefore, unless your business illustrates year over year (“YoY”) revenue growth since COVID, of greater than 10% per year with increasing profitability (Especially EBITDA) do not focus on the revenue numbers.

What institutional investors value and will pay for: So, highlight the below information in your Data Room content:

  1. Systematic Performance Predictability - Companies that have Measurement and Metric Systems that are operationally oriented and illustrate a history of accurately predicting future results, not just report what happened.

  2. A Portfolio of Revenue Sources - That create Revenue Growth Diversification: Businesses where <35% of new revenue comes from direct sales efforts, the remaining from channel distribution partnering etc: see Ephor’s Portfolio of Revenue Sources White Paper

  3. Scalable Operating Models - Organizations that can grow efficiently without proportional cost increases especially in the SG&A expense category.

  4. Risk-Optimized Structures - Companies with variable cost models and diversified customer risk. Investors add value when they can invest in companies that have low customer concentration risk (<10% in any one customer) and cost structures that enjoy <60% fixed costs including fixed payroll.

  5. Leadership Depth Beyond the Founders or CEO Entrepreneur - Businesses with institutional-grade management systems and succession depth generally command a 10% enterprise value premium.

    • The Leadership Team that have a proven experienced and institutional worthy “grey hair” who helps govern the business: See Ephor’s Board of One Concept

The “BIG” Take Away for the CEO/Entrepreneur:

Enterprise value isn't created by individual improvements—it's built through systematic and proven business processes that create a competitive advantages that compound over time.

The companies that attract institutional interest and premium valuations aren't necessarily the largest—they're the ones that have built systematic approaches to enterprise value creation.

Every business improvement decision can either contribute to systematic enterprise value creation or remain a tactical operational change.

In Summary:

The most common mistake that the CEO Entrepreneur makes is that they formulate and organize there DD content or Data Room around what they think is important to them and what they have accomplished in their internal terms.

DD and Enterprise Value success is a result of delivering a business model and its attributes to the investors, packaged up in a manner that presents the DD content to “what the investor or buyer values”!

By clicking on this link you: Ephor presents the phases of Due Diligence and the critical success factors and content of each of those phases. A “Best Practice Guide” to DD.

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