The Politest Fiction
Due diligence is the politest fiction in finance.
Not a lie — a fiction, which is worse, because everyone at the table consents to it. The binder is thick, the workstreams are numbered, the footnotes are impeccable. And then the decision gets made the way it was always going to be made.
Here is the tell. Hand two competent DD teams the same company and the same data room, and they will routinely return two different reads. Different emphasis, different risk weightings, different conclusions politely hedged in different appendices. Nobody finds this strange. But it should end the conversation — because a process that returns different answers to identical inputs is not a measurement. It is an opinion with formatting.
There is a simple three-part standard that separates the two, and it is worth applying to the last DD report on your desk:
Reproducible. Same inputs, same verdict — every time, regardless of who runs it. If the answer depends on which team you hired, you bought judgment, not measurement.
Traceable. Can you walk the conclusion back to a located fact — this number, this gap, this contradiction — without a footnote asking for faith? Or does the report hand you fifty risks and let you pick the ones that match the decision you had already made?
Willing to name its blocker. Does it say what specifically stands between this company and deployable capital — or does it "raise considerations" in ranges that quietly span every outcome?
Most reports fail all three. Not because the people who wrote them didn't work hard — they did — but because the category was never built to pass. Sell-side diligence structurally cannot return a no. Advisory is paid by the engagement, and a clean verdict shortens engagements. Vagueness pays; precision exposes. The fiction is not a failure of effort. It is the professionally rational product.
The alternative is not better opinions. It is a different category of object: a computed verdict — deterministic, auditable, un-manipulable by anyone including its maker — that reads what happens when this specific capital meets this specific company, and names what it finds. We built our practice on that standard because in Energy & Resilience, where hardware, software, and regulation sit on one cap table, the gap between the surface signal and the structural truth has never been wider.
The full essay on Under Load goes further: the incentive anatomy of every seat at the deal table, why the fiction survived twenty years, and what the three tests look like applied to a real report.
Read "The Politest Fiction" on Under Load
Published July 2026 · Robert Kellner