Ep. 91 — Anthony Bahr: What Your Top Customers Will Tell a Buyer That They Won't Tell You

5 min read

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Episode Summary

You think your 20-year customer relationships are your moat. The buyer thinks they’re the risk. And until somebody actually picks up the phone and asks your top accounts the right questions, neither of you really knows. Anthony Bahr runs customer due diligence at Strategex, and he walked me through what happens when a third party calls your biggest customers under the guise of customer satisfaction (not “we’re thinking about buying this company”). The feedback you get is unfiltered, because the customer isn’t being opportunistic about a pending deal. They’re just telling you what they actually think. We got into why 70-90% of deals fail (top customers walk or cut spend post-close), why doing this on the sell side two to three years out is a win-win and doing it on the buy side is win-lose, the real example of a small manufacturer where one customer at 48% of revenue was already onboarding a replacement supplier, and why the open-ended question “what else should this company build?” generated 200 unique innovation ideas from loyal customers. If you’re scared of what your customers will say, you’re not ready to sell. The time to find out is when you’re still in control.

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## Top 10 Takeaways
  1. Long-standing customer relationships feel like a moat. They’re often a risk hiding behind contract length.
  2. If a buyer is going to call your customers anyway, do it first. You control the message and the framing.
  3. Customer diligence done by the buyer is win-lose. Done by the seller two years out, it’s win-win.
  4. Your customers won’t tell you the truth about price, people, or competitors. They’ll tell a neutral third party.
  5. Net Promoter Score plus open-ended commentary triangulates a real story. One data point is a guess.
  6. Innovation born in the lab dies on the shelf. Ask customers what they want before you fund the build.
  7. The seller’s pro-forma is a wish. Three statistics plus five customer quotes is a forecast a buyer can underwrite.
  8. Customers tolerate mistakes. They don’t tolerate silence after the mistake. Trust dies in the communication gap.
  9. The owner is often the relationship. If you exit, the value proposition exits with you unless you Shore up the seat.
  10. If you’re afraid of what your customers will say, that’s the answer. You’re not ready to sell. Fix it now.

Sound Bites

“70 to 90% of deals fail, and one of the major drivers, especially in B2B with customer concentration, is that top customers walk away post close or they lower their spend, and the whole valuation model is shot.” (@TBD) — Anthony Bahr

“If you do it on sell side it’s win-win. If it’s on the buy side it could be win-lose. It could win if it’s validating. It could lose if it tanks the deal or squeezes valuation.” (@TBD) — Anthony Bahr

“The three concepts we put in front of them tanked. Then we asked one open-ended question, what else would you like to see this company develop, and we got 200 unique new product innovation opportunities.” (@TBD) — Anthony Bahr

“They may have been with you for 20 years because you developed a niche product and they needed you. But they’ve moved on and they don’t need you anymore. The relationship looks stable until you ask the right questions.” (@TBD) — Anthony Bahr

“If you’re afraid of what your customers will say, you’re not ready to sell. The time to find out is when you’re in control, not 90 days from closing when the buyer asks for your customer list.” (@TBD) — Ryan & Anthony

About This Episode

Anthony Bahr leads customer due diligence at Strategex, a firm that has been doing voice-of-the-customer work since 1993 across nearly 800 engagements. He spent 15 years in consumer research (pharma, medical devices, financial services, fast food) before moving to Strategex to specialize in B2B customer diligence parallel to a quality of earnings. His team interviews target companies’ top accounts on behalf of private equity firms and strategic acquirers (and increasingly, sellers preparing for market) to surface the real state of customer relationships before a deal closes. About 30 private equity firms and several dozen strategic acquirers use them regularly.

Resources Mentioned

  • Strategex — Anthony’s firm. Voice-of-the-customer and customer due diligence. — strategex.com
  • Anthony Bahr direct — abahr@strategex.com
  • Axial — The deal-making platform where Ryan found Anthony’s article on customer due diligence. — axial.net
  • Net Promoter Score (NPS) — Industry-standard metric Strategex uses as one leg of the triangulation
  • John Warrillow’s Built to Sell — Referenced for the Hub-and-spoke owner-dependency concept

Connections

Phase + Module:

Milestones:

Concepts referenced:

  • Value Gap — The space between what you think your customers feel and what they’d tell a third party
  • Revenue Architecture — Customer concentration as a structural revenue risk
  • Three Lenses of Value — Market value as one lens; customer evidence as the validator

Graph View