Case Study: Customer Due Diligence

Customer Due Diligence helps private equity client reduce their equity check size by $6M.

How a private equity firm used CDD to calibrate forward-looking financials as well as their valuation model.

When you invest in a company, you invest in customer relationships which, in turn, generate revenue and profit. While pro forma financials are grounded in data, we must include the most predictive data point of all – the voice of the customer.


A middle-market private equity firm engaged with Strategex to conduct buy-side due diligence on a target company that was expecting a 50% increase in revenue from 2020 to 2021.

Our private equity client was skeptical since the target serves end markets that had been hit hard by COVID. Strategex used Customer Due Diligence to test these assumptions.


Strategex conducted in-depth interviews with decision-makers at each of the target company’s top accounts. The researchers learned that most top accounts had no intention to significantly increase spending.

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Top account

The target’s top account was forecasted to increase spend by nearly 50%. After speaking with the key contact at this account, we learned there was not likely to be any material change in spend at all.

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Second largest account

The second-largest account was forecasted to grow by 84%. We spoke with two decision-makers here, and while both said there would be an increase, they were only expecting about a 25% bump in spend.

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Account #6

The only bright spot was account number six. Management was expecting a 31% drop in spend, but the customer said spend will be relatively stable. But, given the top three accounts were 60% of revenue, the impact here was negligible.

Without deviation from the norm, progress is not possible.
- Frank Zappa -


Armed with customer insights, our PE client was able to calibrate forward-looking financials as well as their valuation model. This resulted in that $6M check size reduction.

Strategex Customer Due Diligence is voice of the customer research on steroids.

We start with 80/20 financial analyses. Then we interview - and we mean interview - top revenue generators. Customers tell us everything: What they think, what they feel, and their impulses.

Customer due diligence validates the strength and stability of a target’s top accounts. Beyond that, customer due diligence also uncovers insights that can be used to retain at-risk accounts and develop post-close playbooks for profitable market share growth.

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Assess the stability of top revenue generators

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Identify at-risk accounts

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Design customer retention strategies

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Validate the target's growth outlook

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Uncover opportunities to increase wallet share

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Develop 100-day action plan

Diligence that eliminates customer concentration risk

How do you know your acquisition target has the secure customer base they claim? You conduct customer research with Strategex.

In less than 30 days, we assess customer relationships, identify at-risk customers, and provide value creation strategies. We deliver it all before you close.

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