If you run a mid-market PE firm — making acquisitions in the $10M–$250M enterprise value range — you already know the feeling. You engage a reputable FDD provider. You pay a fee that, relative to deal size, is proportionally higher than what a large-cap sponsor pays. You get a competent report. But somewhere between kickoff and delivery, you sense that your engagement isn't getting the firm's best people, its fastest turnaround, or its sharpest analysis.
You're not imagining it. The economics of how traditional FDD firms operate make this outcome close to inevitable.
The partner model and what it optimizes for
Most FDD providers — from the largest global firms through mid-tier networks like BDO, RSM, Grant Thornton, and Mazars, down to regional boutiques — run on a partner-led model. Partners originate engagements, set fees, and take a share of the profit margin. The work itself is executed by managers, seniors, and associates.
This model creates a specific set of incentives. A partner's compensation is driven by revenue under management and margin on that revenue. The rational move, then, is to maximize the number of engagements per partner and to staff them as efficiently as possible — which in practice means as junior as possible. There's a deeper misalignment too: these firms bill by the hour. The longer an engagement takes, the more revenue it generates. There is no structural incentive to deliver faster — and in fact, efficiency works against the economics of the model.
On a $500M deal, the fee justifies deep partner involvement and a senior team. On a $40M deal, it doesn't. The partner shows up for the pitch, sets the scope, reviews the final report, and moves on. The engagement runs on associate and senior-associate time, with a manager providing day-to-day oversight. The client gets the firm's brand. They don't necessarily get the firm's expertise.
Where this breaks down in practice
The consequences aren't abstract. They show up in specific, recurring ways across mid-market FDD engagements.
Junior teams, limited sector knowledge
A second-year associate can extract a trial balance and build an EBITDA bridge. They struggle to assess whether a margin shift is structural or cyclical, whether a customer concentration risk is mitigated by contract terms, or whether a revenue recognition policy is aggressive relative to industry norms. These are judgment calls that require experience the staffing model doesn't allocate to mid-market engagements.
Templated scope, regardless of complexity
To maintain margins on lower-fee engagements, providers standardize scope. The same template gets applied to a straightforward services business and a manufacturing company with complex inventory accounting, intercompany transfers, and multi-currency exposure. The template covers the basics. It doesn't cover what actually matters for the specific deal — and adapting it would require senior time the budget doesn't allow for.
Timelines that reflect capacity, not urgency
Large-cap deals get prioritized because they carry higher fees and higher-profile client relationships. When a firm's transaction services team is at capacity — and in an active deal market, they usually are — mid-market engagements get scheduled around the larger ones. The "4–6 weeks" quoted at scoping becomes 6–8 in practice, not because the work takes longer but because the team is splitting attention.
Partner review as a bottleneck, not a quality gate
The partner review at the end of an engagement is meant to be the quality control layer — the point at which experienced judgment is applied to the team's work. On mid-market deals, this review is often compressed into hours rather than days. The partner is reviewing multiple reports simultaneously. They catch formatting issues and obvious errors. They're less likely to challenge an assumption or request additional analysis that would delay delivery and erode margin.
The fee illusion
Mid-market PE firms often assume they're getting a proportional service for a proportional fee. In reality, the economics work against them.
A $30M deal might carry a $60K–$100K FDD fee. A $300M deal might carry $250K–$400K. The larger engagement costs more in absolute terms, but it delivers proportionally more senior time, more bespoke analysis, and faster turnaround. The mid-market client is subsidizing the firm's infrastructure without receiving the full benefit of it.
This isn't a criticism of the people doing the work. Associates and managers at these firms are often talented and diligent. The problem is structural. The model allocates expertise by fee size, and mid-market deals sit on the wrong side of that equation.
Why this matters more than it used to
Historically, the mid-market absorbed this quality gap because there was no alternative. You either engaged a recognized firm and accepted the staffing trade-offs, or you used a sole practitioner who lacked the process and infrastructure to deliver a lender-ready report.
Two things have changed. First, lender expectations have risen. Credit committees apply increasingly rigorous standards to FDD reports regardless of deal size. A mid-market report that would have passed five years ago now generates follow-up questions. The quality bar has moved up; the provider model hasn't moved with it.
Second, technology has changed what's possible. The most labor-intensive parts of FDD — data extraction, normalization, source-tracing, variance analysis — are precisely the tasks where AI delivers the largest productivity gains. This doesn't replace the experienced practitioner. It means the practitioner's time can go entirely into analysis and judgment rather than being consumed by the manual work that currently eats 60–70% of an engagement.
What the mid-market actually needs
The answer isn't cheaper diligence. It's diligence that allocates expertise and technology differently. A mid-market PE firm making a $50M acquisition needs the same analytical depth as a $500M deal — the lender requires it, the investment thesis depends on it, and the purchase price negotiations demand it. What they don't need is the overhead, the templated approach, and the junior staffing that the traditional model forces on them.
Signum was built for this segment. We combine experienced PE practitioners with AI to deliver lender-ready FDD reports in days. Our model doesn't have the incentive structure that deprioritizes smaller engagements — every deal gets the same depth of analysis, the same source traceability, and the same senior attention, because the technology handles the work that traditional firms use junior headcount for.
The mid-market deserves better than being the afterthought in someone else's portfolio. The economics finally allow for it.
FDD built for the mid-market, not adapted from large-cap.
Signum delivers the depth and speed that mid-market PE firms need — without the staffing trade-offs of the partner model.
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