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20 Tips to Maximize Private Equity, Investment and Strategic Buyer Outcomes (Part 4: You Can’t Hide the Customer Voice)

09/26/2019 By


The Spend Matters analyst team has collectively been involved in dozens of transactions in the procurement solutions market in recent years. From our vantage point, especially in the due diligence area, we have seen firsthand how most sellers only partially prepare to maximize their upside to come out of a transaction/investment.

This Spend Matters Nexus brief provides insight into how a company in the procurement solutions sector (and others) is likely to be evaluated so that it can best prepare for a process. In our view, transactions do not have to be a zero sum game, as optimal synergies are best when planned, measured and then executed against.

So far in this Nexus series, we covered the initial nine tips to prepare — ideally far in advance — for the process itself (see Part 1 , Part 2 and Part 3). The next parts of the series will go into further detail on the next set of ten tips.  In Part 5 we will turn our attention to three areas: investment bankers (where they add the most value vs. not); the benefits of established “added” metrics to track the business; and explaining and justifying competitive differentiation in a manner that investors will believe (or not). In Part 6 we will focus on the importance of fleshing out an acquisition strategy and roadmap — and “knowing the end game” in terms of likely future buyers after the next phase of the company’s growth. Part 7 will follow up with the ideal exit process and outcome with Part 8 focussing on knowing your own personal and company weaknesses. Part 9 will conclude this series with tip 20: Defining the 'Post-Close' Plan.

Today’s installment focuses on the voice of the customer — and almost singularly how important this factor is overall. Tip number 10: Knowing what your customers think (and how smart buyers, especially private equity, will discern the true state of customer satisfaction and metrics even without the support of the selling firm).

Many management teams are not aware of the lengths that acquirers and their advisers will go to in conducting advanced customer due diligence. This includes reviewing all available third-party information in the public (or “partial” public domain), such as talking to analysts, consultants/channel partners and, of course, reference customers themselves — whether sanctioned or not by the selling party. Their techniques might surprise you, as the voice of the customer is an indispensable due diligence component in mitigating risk, as well as helping quantify synergies and upside for a given deal.

Jason Busch serves as Managing Director of Spend Matters Nexus, a membership, research and advisory organization serving technology acquirers (private equity, corporate development, etc.) and CEOs in the procurement and finance solutions marketplace (including contract management, B2B marketplaces/connectivity, indirect procurement, services procurement, direct procurement, commodity management, payment, trade financing, GRC/third-party management and related adjacent sectors).

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