European Due Diligence Report 2026
How Due Diligence is Adapting to Volatility
Long-held trade alliances, supply chain dynamics and demand assumptions have been repeatedly fractured under the pressure of geopolitics, technological and societal shifts, as well as Black Swan events like the Covid pandemic.
With that, key reference points for deal underwriting – demand patterns, cost structures and competitive dynamics – are now subject to faster and less predictable change, making it much harder to evaluate businesses and their potential.
A&M Private Equity Report:
How Due Diligence is Adapting to Volatility
Our research, based on a survey of over 80 senior private equity professionals across Europe, reveals how the most sophisticated investors are adapting their diligence approach in this environment: the rising adoption of AI across work streams, the key risks and opportunities being assessed in pre-deal to address increased volatility, the rising demand for integrated diligence approaches, and the gap between market demand and what diligence advisors currently deliver.
Key Takeaways from the 2026 Due Diligence Report
AI is being embedded across DD workstreams, with successful use cases in data collection, risk assessment, market intelligence and scenario planning. Adoption is high across the board, with over 80% using the technology consistently or experimenting with it. Tier 1 funds are furthest ahead: 70% use AI consistently, versus 41% of large or 28% of mid-sized funds.
Beyond using AI as a diligence tool, 80% of sponsors are actively incorporating AI into their investment thesis as a driver of operational and commercial value. Of those, 41% consider AI in pre-deal at an operational level (evaluating how it can drive efficiency, automation, cost savings), while 39% view it primarily as a growth enabler (driving commercial expansion, new offerings, customer enhancement).
Value creation remains a key focus of due diligence, cited by 93% of respondents, but it is increasingly balanced by value protection: around 60% report a strong emphasis on assessing downside risk in pre-deal. Geopolitical exposure is the single greatest risk in diligence, cited by nearly 70%, ahead of AI disruption, climate change and cybersecurity.
Geopolitical instability, de-globalisation and AI disruption have made growth trajectories harder to predict and supply chains more volatile, and this is changing how sponsors approach diligence. They now demand equally rigorous operational assessment alongside commercial and financial analysis – evaluating cost structures, workforce capability, technology readiness and leadership capacity to execute on fast-moving growth strategies.
Sponsors increasingly recognise the value of an integrated diligence approach to build deal conviction in today’s market. They seek a unified, coherent view of the asset, where commercial drivers are grounded in operational realities, financial dynamics, and execution capability. This is particularly relevant in complex deals such as carve-outs, cross-border transactions or those involving businesses highly exposed to AI disruption and supply chain volatility. However, only 18% of respondents say providers offer a fully integrated due diligence offering.
Integrated Due Diligence: Building Deal Conviction in Uncertain Times
To build conviction and win deals in a competitive market, sponsors need a fully connected view of a target’s potential – testing commercial ambitions against operational realities. Understanding interdependencies between strategy and operations is even more critical in the highly volatile environment we see today across most sectors.
At A&M, we align excellence across all diligence disciplines within a single, integrated team – connecting commercial insights with operational and financial realities to identify where value is truly created and what it will take to realise it. The result is not just a sharper investment thesis, but a transformation plan ready to execute from Day 1.
Rather than operating in silos, our commercial, operational, financial, tax and technology experts work as one team, ensuring deeper insights, faster alignment and a common understanding of value creation opportunity and risk.
Download the full report to explore the findings in detail, and discover how A&M is helping PE firms navigate complexity and build confidence in today's volatile environment.
