What is marketing due diligence in private equity?

Marketing due diligence is a commercial review of a target company's marketing engine, scoped to a 3-4 week sprint and producing a working memo with an EBITDA-impact estimate. It assesses spend efficiency, attribution integrity, lead quality, vendor concentration, brand equity, competitive position, and operational maturity. It belongs alongside commercial, operational, and financial DD in any home services platform deal.

When should marketing diligence happen — pre-LOI or post-close?

Pre-LOI, in the same window as commercial diligence. Findings can inform the bid, inform structure, or surface deal-killing issues before exclusivity locks the sponsor in. Post-close marketing diligence is still valuable as the first move of value creation, but it cannot inform the deal itself — by then the bid is committed.

What does a marketing diligence engagement cost?

A 3-4 week pre-LOI sprint typically prices at $35,000-$90,000 depending on the scale of the target — single-portco vs. multi-DMA roll-up. The cost is small relative to the EBITDA delta typical findings move: vendor consolidation alone usually returns 5-10x the diligence fee in the first 18 months of hold.

Who runs marketing diligence in PE deals?

Until recently, marketing diligence was often bolted onto commercial DD by generalist consultants — which is why most sponsors get a slide instead of a real review. Specialist marketing diligence providers, including Sheppard, conduct the work as a discrete workstream alongside the commercial DD provider and produce deal-team-ready outputs.

Can marketing diligence kill a deal?

Occasionally, yes. The most common deal-killing findings are: vendor contracts the seller cannot exit, attribution failures that make the topline unverifiable, and brand-equity erosion across DMAs that alters the exit thesis. None of these are typical, but they are the cases where pre-LOI diligence prevents a meaningfully bad outcome.

Diligence

The marketing diligence every PE sponsor should run before LOI — not after

Most marketing due diligence happens 90 days post-close. By then, the EBITDA-impact estimate is locked, the operating partner has met the team, and the vendors have a year of runway. The diligence that earns its keep is the one that informs the bid — or kills it.

By Chris SheppardApril 18, 20269 min read

Walk into any PE deal team room in residential home services and you'll see a familiar pattern: commercial due diligence is rigorous, financial diligence is exhaustive, operational diligence is competent — and marketing diligence is a slide. Sometimes two. Usually written by a generalist consultant who interviewed the target's CMO for ninety minutes and looked at a Google Ads dashboard.

That's a problem, because marketing is now a meaningful EBITDA lever in home services platforms. The vendor relationships, attribution methodology, brand equity, and channel mix you're inheriting at close are real assets — or real liabilities — and they need to be priced into the bid.

Why marketing diligence belongs in the LOI window

The conventional wisdom is that marketing is too soft to diligence pre-LOI. Sponsors assume the operating partner will sort it out in the first ninety days. Three problems with that.

First, ninety days is a quarter of value-creation runway. A platform with 18 months of hold left can't afford to spend the first 90 days discovering what its marketing function looks like. Discovery should be done before close.

Second, vendor consolidation — usually the largest single marketing EBITDA lever — is contractually time-bounded. Multi-year agency contracts inherited at close are far harder to unwind than they would have been to negotiate around in a clean handoff.

Third, the marketing data quality determines whether the operating partner can run the platform at all. If the platform doesn't agree internally on what counts as a closed deal, attribution methodology can't be installed in month two. It has to be designed in week one.

The diligence that matters is the one that informs the bid — or kills it. A 45-day vendor consolidation finding can move the EBITDA-impact estimate enough to change the math the deal team brings to committee.

What a four-week marketing diligence covers

A credible commercial review of the marketing engine has seven workstreams. Each one is sized to fit inside the LOI window and produce a discrete output the deal team can fold into committee materials.

Spend efficiency review. Paid search, paid social, local, and offline — analyzed against booked-call rate and closed-revenue contribution, not impressions or clicks. The output is a sourced-revenue waterfall that tells the committee which channels are actually driving the topline.
Attribution integrity audit. The single most common pre-close finding is that the target's reported attribution is fiction — multi-touch models papering over a CRM that doesn't reconcile to the dialer or the dispatch system. The audit assesses what the data actually proves vs. what reporting claims.
Lead quality and disposition analysis. Across CRM, dialer, and dispatch systems, where do leads die? What share converts to booked appointments? What share converts to revenue? This is the operational picture most sellers don't have themselves.
Vendor concentration and contract map. Every agency, freelancer, software vendor, and call tracking system — with contract terms, exit clauses, and renewal cycles. This is the blueprint for value creation in the first 100 days.
Brand equity baseline. Competitive share-of-voice in the priority DMAs, branded search trend, review velocity, local-pack visibility. The brand layer that will determine pricing power across the hold period.
Operational marketing maturity scoring. The function's tooling, talent, and operating cadence vs. platform benchmarks. This is where sponsor-grade rigor lands.
EBITDA-impact estimate. The synthesis: what's recoverable, what's structural, what the 100-day plan looks like in dollars.

The output that earns its keep

Marketing diligence outputs three things. A working memo with an executive summary the deal team can read in five minutes. A detailed appendix with the workstream findings, sized so the operating partner can hand it directly to the portco CEO. And the EBITDA-impact estimate — modeled, sourced, and defensible.

If a marketing diligence engagement doesn't produce a quantified EBITDA delta, it wasn't diligence. It was a brand review. Those have their place, but not at the deal-team table.

When to scope it

The cleanest cadence is to scope marketing diligence the day the LOI is signed — usually a 3-4 week sprint, parallel to commercial and operational DD. It produces an output in time for IC and gives the deal team enough margin to factor findings into bid structure or negotiation posture.

The next-best cadence is a sixty-day post-close sprint, run as the first move of the value-creation engagement. The findings still drive the 100-day plan; they just don't reprice the bid.

The worst cadence is the implicit one most platforms run today: discover what the marketing function looks like by accident, over the first six months, while the value-creation clock runs.