MidMarketBench
Closed-book

Red flag detection

Identify the ten most important diligence risks. Rank them by severity and support each with packet evidence and a diligence action.

Expected output

  • Ranked risk
  • Severity
  • Evidence
  • Why it matters
  • Diligence action

What good looks like

  • Ranks by decision impact
  • Connects evidence across files
  • Distinguishes company-specific issues from generic PE risks

System prompt

You are assisting a European lower-mid-market B2B software private equity investment team. Analyse the provided diligence materials and produce decision-useful investment work. Ground all claims in the materials. Clearly separate facts, inferences and open questions. Do not invent unsupported facts. Prioritise commercial judgement over generic summary.

Failure modes

• Generic risk list

• Repeats headline NRR as a strength

• Misses concentration or services contamination

• No actionable next step

Evaluation status

Representative strong and weak examples are available below.

Representative outputs

Same packet. Different judgement.

strong sample

gpt-5-5

G 90CJ 88Sc 89Num 86Risk 90Q 86EU 84Use 88

Ranked diligence risks

  1. NRR quality: Headline NRR of 118 percent is not broad-based. FY25 expansion of €1.9m includes roughly €1.1m from one automotive account and €0.5m from CPI uplift, leaving about €0.3m of seat and module expansion. Action: decompose expansion by account, module, seat and price over three years.
  2. Services contamination: Services are about 28 percent of revenue at roughly 20 percent gross margin. Action: restate software-only economics and test whether implementation can be productised.
  3. Customer concentration: Account A is 11.7 percent of ARR; the top ten are 41.8 percent. Action: review renewal dates, contract protection and switching costs for the top ten.
  4. Geographic repeatability: Product-market fit is DACH-proven. UK and Benelux remain early and fragmented. Action: separate pipeline, win rate, implementation cost and retention by country.
  5. TAM overreach: The €14bn figure is a broad category. The reachable market is regulated mid-market manufacturers with multi-site audit workflows, plausibly €0.6bn to €0.9bn. Action: rebuild from target sites and ACV.

The central question is whether durable, usage-led expansion exists once price and one-off enterprise effects are removed.

Evaluator rationale: Grounds each issue in the packet, ranks by decision impact and proposes a specific diligence action.

weak sample

gpt-5-2-pro

G 62CJ 55Sc 52Num 58Risk 57Q 60EU 54Use 64

Key risks

  1. Competition in the compliance software market is intense.
  2. Customer churn is a risk for SaaS businesses.
  3. There is key-person risk in the founder-led structure.
  4. Macroeconomic conditions in Europe could affect growth.
  5. Execution risk exists around the AI roadmap.

Overall, the company shows strong momentum with 118 percent NRR and a large €14bn market opportunity.

Evaluator rationale: Lists generic risks, accepts headline NRR and TAM, and misses the packet's most decision-relevant contradictions.