Customer and Market Due Dilligence

Overview

We help our clients to assess the attractiveness and sustainability of the market and customer base of the company they are seeking to acquire. We combine research of secondary sources with a range of customer and industry interviews to develop an in-depth understanding of the strengths and weaknesses of the target’s products and competitive position. We also provide analysis and assessment of the risks to the targets near-term revenue forecast.

All our interviews are conducted in-person or via telephone by members of the Callidon team. We do not use temporary, freelance or outsourced call centers. We strongly believe that interviews conducted by experienced consultants, with good business judgment result in deeper market insights and a higher level of engagement with the interviewees.

Strategic Challenges

Many organizations invest in financial and legal due diligence, but fail to invest in customer and market due diligence. This is particularly true of strategic buyers who have extensive experience of the target’s market and competitive position. Unfortunately, these organizations frequently miss specific customer issues or emerging competitive threats which make it difficult for the target to achieve its revenue forecast. These are typically not the result of systemic problems with the company, but result from smaller threats that have the potential to create a 1%-10% hole in the target’s near-term revenue plan.

Customer and market due diligence is a relatively inexpensive way to identify risks and issues with the target’s revenue forecast and market position. With this knowledge, the acquiring company can preemptively address these potential problems with:

• Mitigation strategies
• Negotiated reduction in purchase price
• Increasing contingent portion of purchase price
• Termination of acquisition offer, in rare cases

Activities

• Analyze target’s competitors and build understanding of competitive products
• Develop market research approach to test key investment hypotheses, including:
  • Number of Interviews by product and customer segment
  • Mix between qualitative and quantitative interviews
  • Interview approach
    • Blind interviews or company sponsored voice of customer interviews
    • Mix of Web Survey, in-person and telephone interview
• Interview industry participants to:
  • Investigate industry trends
  • Analyze customer value chain
• Conduct qualitative telephone, in-person, and web customer interviews / surveys to test target’s
  • Value proposition versus competitors
  • Competitive advantages and disadvantages
  • Validity of Target’s growth strategies / hypotheses
  • Other key issues
• Develop assessment of target market and competitors, including:
  • Industry trends and attractiveness
  • Target’s competitive position
  • Sustainability of position / competitive threats
  • Stability of the current customer base