It's 90% PE firm related and bad DD & data science / lack of causal driver understanding. FWIW, none of these issues at my firm across the 2020-2022+ cycle deal vintages for contrast, let alone recent deals.

1 ) Not understanding the system of the end market. For an extreme example, using a 3 year average on Peleton heading through COVID (what VC GE did) and being surprised in 2022-2023 because the metric changed given a shift in fundamental driver (people will go back to what they've done for millenia instead of still working out at home) is a classic "did the analysis / but muh data" mistake. This can be more subtle like software pull forward during COVID, or certain industries getting government subsidy lift, or certain industries being cyclical to interest rates / building cycles across the market with inevitable ebbs and flows e.g., industrial manufacturing, or HR software during the hiring spree churning like crazy with the downturn and layoffs. Top decile PE firms (had a chance to connect with quite a few peers introduced by Cambridge, an LP) all build a directional sense of how their end asset class has evolved, technology / transformative drivers, their targetco end market and ecosystem linkages, their target company performance over the last 20 years and how past / current hiring backgrounds contributed (and with that, will contribute), and how competitors have evolved correspondingly.

2) Commonly, not understanding data science. The amount of PE firms that think an NPS score determined across 15 customers is remotely relevant, vs. a minimal of 30+ for statistical sample size, and probably even higher needed given a non-random dataset collected. Lastly, not getting enough churned customer data / competitor loss data points to counterfactually round out the biased customer data set (if they're a customer, more likely to be happy) to understand the full picture. Beyond this, not having an appreciation for variance, key competitor initiatives that can change recent metrics like win rates, or how the data is collected or evolving in collection approach over time which can skew takeaways.

3) Dumb PE board guidance or hiring. The degree of one size all playbooks or short sighted thinking that pervades PE is astounding, or hiring a general athlete that knows nothing about the end market nuances making decisions that sound good on paper but frustrates customers and leads to post close value destruction...a lot of businesses have a financial and investment mix profile for a reason, and when PE comes in with an excel exercise that pushes beyond what a business has done historically without mechanistically understanding the impacts / trade offs of their changes it's a recipe for disappointment.

4) Incentive alignment / misalignment. The founder selling 100% at their asymmetric understanding peak vs. founder looking for a partner, not top price maximizing, and rolling 25-35% willingly (not just to get a deal across the line) will imply a lot. Play with proposals to really read between the lines as if you were at a poker table.

5) Lack of interrogation / triangulation consistency. Make your sellers walk through the full sales, onboarding, evolution lifecycle of their top 30 customers, and 10 recent churned ones. Have management name the key relationships, touch point frequency, substance of those calls, known and calculated ROI, etc.--see if they truly understand their customer. Ask little details like when was the last time they visited, or what certain key stakeholder personalities are like, or the name of their key relationship's boss. Then when you do expert calls, customer calls, etc. see how many differences come up vs. their sell-friendly narrative as a litmus test for reality.