# Question and diligence bank

## Table of contents
1. Question design rules
2. Question matrix format
3. Universal finance question categories
4. Diligence ask patterns
5. Weak questions to avoid
6. Escalation prompts

## 1. Question design rules
Good meeting questions are pointed, evidence-seeking, and decision-linked. For every key question, know why it matters.

Use this hierarchy:
1. decision-critical questions;
2. questions that validate or invalidate the thesis;
3. questions that expose downside, fraud, data quality, or execution risk;
4. questions that clarify process, ownership, or timing;
5. background questions only if needed.

Avoid asking questions that can be answered from available sources unless the goal is to test consistency, credibility, or judgment.

For an introductory coverage meeting, prioritize conversational leverage over exhaustive coverage:

- Use three to five questions that surface strategic priorities, mandate triggers, decision-makers, and a permissioned next step.
- Convert public facts into an informed question rather than re-asking for disclosed information.
- Keep technical follow-ups ready as listening prompts; do not present a long diligence inventory unless management confirms an actionable workstream.
- Avoid manufacturing a financing need, active M&A appetite, target list, or transaction timetable from public liquidity or strategy disclosures.

## 2. Question matrix format
Use a matrix when the user needs rigor:

| Priority | Topic | Question | Why it matters | Good answer | Concern answer | Evidence to request | Follow-up |
|---:|---|---|---|---|---|---|---|

For shorter prep, use bullets with "why it matters" after each question.

## 3. Universal finance question categories

### Business model and market
- What are the two or three drivers that most explain growth over the last 12-24 months?
- Which customer segments or channels are growing fastest, and which are deteriorating?
- What competitor behavior has changed most recently?
- What is the clearest evidence that the market is expanding versus the company taking share?

### Revenue quality
- How much growth is volume, price, mix, new logo, retention, upsell, usage, or acquisition driven?
- What portion of revenue is recurring, contracted, usage-based, transactional, seasonal, or non-recurring?
- Where are bookings, backlog, ARR/MRR, pipeline, or revenue recognition not comparable across periods?
- What customer or contract cohorts are performing materially better or worse than plan?

### Customer and sales motion
- What are the largest customer concentration risks and renewal dates?
- What is the sales cycle by segment, and how has it changed?
- What are win rates, loss reasons, discounting, implementation time, and ramp times?
- Where is pipeline quality strongest and weakest?

### Margins and operating leverage
- What explains margin movement: price, mix, labor, input cost, utilization, cloud/hosting, procurement, freight, or one-time items?
- Which costs are truly variable versus fixed or step-function?
- What cost actions are available in a downside case, and what growth would they impair?
- Where are current margins above or below normalized potential?

### Cash flow, working capital, capex, and liquidity
- What drove cash conversion relative to EBITDA or net income?
- Which working-capital movements are timing versus structural?
- What capex is maintenance versus growth?
- What liquidity stress case has management modeled, and what actions are available?

### Quality of earnings and adjustments
- Which add-backs are recurring, discretionary, one-time, run-rate, or unsupported?
- Which revenue or cost items are subject to cutoff, recognition, deferral, or capitalization judgment?
- How do management EBITDA, lender EBITDA, and buyer EBITDA differ?
- What adjustments would fail under lender or auditor scrutiny?

### Valuation, returns, and downside
- What assumptions drive most of the valuation or return outcome?
- What is the breakeven revenue, margin, exit multiple, leverage, or cost of capital?
- What downside scenario is realistic rather than punitive?
- What would make the investment unfinanceable, unattractive, or non-actionable?

### Management credibility and incentives
- What has management consistently under- or over-forecasted?
- What incentives could bias the story?
- What examples show operational discipline, customer insight, or capital allocation judgment?
- What would management do differently with unlimited capital versus constrained capital?

### Process and decision mechanics
- Who is the decision-maker, who can block, and what is the approval path?
- What is the next decision gate and what evidence is needed before it?
- What are the timing constraints, confidentiality issues, and communication rules?
- What would cause the process to stop?

## 4. Diligence ask patterns
Separate asks by timing and burden.

### Pre-meeting asks
Use for documents that materially improve the call:
- latest financials, KPI package, budget, forecast, board deck, or lender package;
- data room index and latest uploads;
- customer concentration, cohort, churn, renewal, backlog, bookings, or pipeline data;
- debt schedule, covenant calculations, liquidity forecast, NWC schedule, capex plan;
- management bios, org chart, sales pipeline, product roadmap, litigation/regulatory summary.

### In-meeting asks
Use for judgment, explanation, and prioritization:
- what changed, why it changed, and how management knows;
- which assumptions management has the least confidence in;
- which issues are most likely to surprise investors, lenders, or the board;
- what evidence management would provide to prove the claim.

### Post-meeting asks
Use for follow-through:
- specific support file, source data, bridge, tie-out, or owner;
- deadline and format;
- who is responsible;
- what decision the ask supports.

## 5. Weak questions to avoid
Replace generic questions with specific ones.

- Weak: "What keeps you up at night?"
  Better: "Which KPI in the latest forecast has the widest downside range, and what operational trigger would tell us by mid-quarter that plan is at risk?"

- Weak: "How is the pipeline?"
  Better: "What percent of next-quarter pipeline is committed versus best case, how does that compare with the last four quarters, and what is the conversion rate by segment?"

- Weak: "Can you talk about margins?"
  Better: "How much of the 300 bps margin improvement is price/mix versus one-time cost actions, and which portion should we underwrite as recurring?"

- Weak: "What are the risks?"
  Better: "What is the single assumption in our base case you would be least comfortable underwriting, and what data would change your view?"

## 6. Escalation prompts
Escalate or caveat when questions touch:
- material non-public information, selective disclosure, or trading restrictions;
- privileged, confidential, or competitively sensitive information;
- legal, regulatory, antitrust, sanctions, tax, accounting, or audit issues requiring specialist review;
- employee, customer, patient, or personal data;
- topics that should not be asked in an expert call or external meeting.