This glossary defines the roles, review terms and working documents used in acquisition diligence and value creation. Start with the term pages for operating partner, commercial due diligence, management services organization and forward-deployed engineer, then use the working definitions to distinguish public observations, authorized checks and the actions a team owns.
In short
- Use the term pages to clarify roles, review scope and implementation responsibilities.
- A target is the company before close; a portfolio company is the same company after close.
- Keep public evidence, authorized testing and unanswered questions separate in every review.
Diligence and value creation terms.
This glossary defines the roles and review terms a deal team uses when evaluating a target and planning work after close. Each term page includes an example and links to the relevant diligence or implementation work.
Who and what does a diligence review describe?
A diligence review describes a target before close and a portfolio company after close. The sponsor commissions the work, and the sponsor’s people form the deal team.
Target is the company being evaluated before close.
Portfolio company is the same company after close.
Sponsor is the PE firm that commissions the work. The deal team is the sponsor’s people.
Peers are the target’s direct competitors, chosen with the sponsor.
Public evidence is websites, listings, reviews, search results, AI answers and ad records.
The private equity due diligence framework connects this vocabulary to the areas a deal team reviews.
What do the evidence and access terms mean?
Evidence terms describe what was observed and how the observation was made. A public observation does not establish what happens inside the target’s systems; internal checks need authorized access.
Outside-in diligence is an audit of a target from public evidence and mystery shops, with no access to its systems or management time. Our working definition.
Mystery shop is a test contact by phone, form or chat, made as a customer would, with real or simulated customers, agreed with the sponsor, within the deal’s NDA and no-contact terms. Our working definition.
Authorized testing is penetration testing and any check inside the target’s systems; it needs authorized access and runs only on request. Our working definition.
Finding is an observed issue, with its evidence.
Open question is something the outside view cannot settle; each comes with the record, dataset or data-room request that would settle it.
The outside-in diligence method explains how findings and open questions move through sponsor review.
What do the plan and deliverable terms mean?
Plan terms connect findings to owned work and a measure of completion. Value creation and hardening sit alongside each other, with evidence and sponsor approval attached to the decisions.
Value creation is plan work that grows revenue or margin.
Hardening is plan work that closes risks that could cost value.
Prioritized risk register is each risk with likelihood, impact, owner, evidence and a counsel flag.
Scorecard is measures with a counting rule, a dated baseline and an owner.
Counsel flag is a mark that sends a finding to the sponsor’s legal counsel.
Sponsor sign-off is the sponsor’s approval at the end of each step.
Use the risk register template to capture supported findings. The sample diligence deliverables show how the register, plan and scorecard fit together.
Use the glossary with the working resources.
The glossary explains the terms; a checklist organizes the evidence and access requests for the review. Keep the meaning of each term alongside the task it informs.
Find the checklists and guides in diligence resources.
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