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Pricing Due Diligence for Investors — Quantified Upside Before the IC

AI-Powered Pricing Diligence with a Number on It

PE deal teams need a pricing thesis with a number on it before the investment committee, not after the close. Revology builds an AI-powered pricing diligence asset on the target's transaction data, segment economics, and competitive context: quantified gross margin recovery, channel pricing upside, promo waste, and a 100-day post-close playbook. For mid-market assets ($100M–$2B), typical findings include 200–400 bps of recoverable gross profit and 4–6% gross margin recovery on B2B channel pricing. Delivered IC-ready in 2–3 weeks when the data room contains transaction-level pricing history. Post-close, the diligence converts into a 90–120 day capability build co-designed with the PortCo team.

What it is

Deal teams need a pricing thesis before the IC. Revology delivers AI-powered pricing diligence, quantified upside, and a 100-day playbook in 2–3 weeks when transaction data is ready.

Professional financial due diligence analysis for investor decision-making.

How It Benefits Clients

Uncovers Hidden Value

This diligence frequently reveals untapped pricing opportunities – for instance, the target might be underpriced in certain segments or not leveraging value-based pricing. By quantifying these, investors see a clear path to revenue and EBITDA uplift post-acquisition. It’s not uncommon to identify a few percentage points of margin expansion potential simply by bringing the target’s pricing in line with market value or tightening discount policies.

Informs Investment Valuation

If a company has significant pricing upside, an investor can factor that into their valuation model (either justifying a higher purchase price or seeing how they will hit return targets). Conversely, if the target’s current profits rely on unsustainably high prices or heavy discounting to drive volume, due diligence flags this risk, preventing over-valuation. In short, pricing due diligence provides a more accurate picture of the target’s true earning power.

Post-Acquisition Game Plan

Investors gain a ready-made roadmap of pricing initiatives to implement on Day 1. Rather than waiting months to discover where to improve, they can hit the ground running with pricing improvements (price harmonization, updated price lists, new surcharge programs, etc.) that drive early wins in the investment period. This accelerates value creation within the typical private equity hold period.

Risk Mitigation

The analysis can also highlight red flags – for example, if an unusually large portion of revenue comes from a few customers who enjoy heavy discounts or if there’s impending price pressure due to new competitors or regulation. Knowing these risks upfront means the investor can devise mitigation strategies or even reconsider the deal if the risk is too high. Essentially, it prevents unpleasant surprises by making pricing transparency part of the deal diligence.

Our Approach

We build elasticity models in a collaborative and transparent manner so that your organization truly owns the insights:

1
Rapid Data Collection

We request and parse critical pricing-related data from the target (often under NDA via the data room). This typically includes SKU-level sales data (prices, volumes), customer-level sales and margins, current price lists or policies, and any deal desk/discount approval records. We also gather market data available – industry pricing benchmarks, competitive price points – to understand the external context. Our team quickly cleans and analyzes this data to identify patterns (for example, how much pricing variance exists for the same product, or trend of price realization over the past years).

2
Current State Assessment

We evaluate the target’s pricing effectiveness and discipline. This means calculating metrics like average discount by customer segment, pocket margin by product (after all discounts/rebates), and identifying any margin leakage points. We often visualize the price waterfall from list price to net price to see where value is leaking (e.g., overly generous rebates, unmanaged freight charges, etc.). In parallel, we compare the target’s pricing structure to industry norms: Are they pricing in line with value? Are they using modern techniques like dynamic pricing or segmentation, or are they simplistic (one-size-fits-all pricing)? We also look at organizational aspects if info permits – e.g., does the company even have a pricing function or is it all sales-driven, which can indicate the level of sophistication.

3
Opportunity Identification

Based on the assessment, we pinpoint concrete pricing opportunities. For example, we might find the target has not raised prices on a high-demand product in three years – a clear opportunity for an increase. Or perhaps certain customers consistently get an extra 5% discount with no volume justification – an opportunity to tighten policies. We quantify these where possible: “By reducing discount variance and bringing all customers to at least 15% gross margin, the company could gain $X million in profit.”. We consider quick wins (things that can be done in 3–6 months) versus longer-term strategic changes (like implementing a new pricing software or value-based pricing program).

4
Investor Workshop

Given the fast pace of deals, we typically present our findings in a workshop or report to the investor’s deal team. We highlight the top 2–3 pricing levers that would create the most value and discuss feasibility. For instance, if a price increase is recommended, we discuss how customers might react and any prerequisites (like improving value communication). We also frankly point out any concerns – e.g., “Customer concentration is high and these top customers have been given 30% discounts; any attempt to roll that back should be done carefully or could risk volume.” This candid insight helps the investor craft their negotiation strategy and post-acquisition plans.

5
Post-Close Support

While technically outside due diligence, our role often continues post-close, where we assist the portfolio company (now under the investor’s ownership) in executing the identified pricing improvements. Because we’ve already done the analysis, we can quickly move into implementation mode, developing the new price lists, policies, and tools needed. This ensures the thesis outlined in diligence is actually realized in practice, delivering the promised EBITDA improvements.

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Frequently Asked Questions

How fast can Revology turn around a pricing diligence asset?

2 to 3 weeks for the diligence asset and 100-day playbook. Faster turns are possible when the data room contains transaction-level pricing history.

What does the pricing diligence asset include?

A quantified pricing-power thesis (recoverable gross margin, channel pricing upside, promo waste), a competitive pricing context analysis, a 100-day post-close playbook, and a 12-month value-creation roadmap.

Does Revology work post-close as well?

Yes. Most PE engagements continue into a 90- to 120-day post-close build, co-designed with the PortCo team, where the diligence findings become a running pricing operating system.