Customer Calls During Due Diligence - What Buyers Really Ask Your Key Accounts

The call comes three weeks into due diligence. Your largest customer’s procurement director answers the phone expecting a routine supplier check and instead spends forty-five minutes with a private equity associate asking questions you never anticipated. By the time you hear about it, the damage, or the validation, is already done.

Executive Summary

Customer reference calls represent one of the most unpredictable elements of the due diligence process, yet most business owners invest almost no preparation time in this critical phase. Buyers conducting customer due diligence calls aren’t simply verifying that your clients exist. They’re probing for relationship depth, competitive vulnerabilities, pricing power, service gaps, and post-acquisition switching risk that can influence their valuation models and deal terms.

Important context: This framework applies most directly to mid-market transactions ($5M-$50M enterprise value) in the United States, where financial buyers, particularly private equity firms, conduct dedicated customer due diligence. Our experience extends to transactions up to $75M, and the principles apply across this range. The relevance and intensity of customer calls differs significantly for strategic acquisitions, add-on purchases, and smaller transactions where buyers may skip customer calls entirely or conduct them informally. Customer due diligence practices also vary in international markets, where formality and intensity may differ substantially.

A critical caveat before we proceed: Customer preparation can improve due diligence outcomes, but it also carries real risks. Preparation that appears coached can damage buyer confidence, sometimes more severely than the issues it was meant to address. The framework in this article aims to help you navigate these tradeoffs, but preparation is not a universally positive intervention. Understanding when and how to prepare, and when minimal preparation may be superior, is necessary.

The challenge for sellers lies in the inherent tension between preparation and manipulation. Customers who receive obviously coached talking points create credibility problems that can complicate deals faster than honest criticism would. Meanwhile, completely unprepared customers may offer context-free complaints or reveal competitive sensitivities you’d prefer to address differently.

This article provides a framework for navigating customer due diligence calls effectively. We’ll examine what buyers typically ask during these conversations, which customers they select, how to conduct appropriate preparation conversations without crossing into manipulation, and strategies for managing the reference process professionally. The goal isn’t to script your customers. It’s to make sure they understand the context of the conversation and can represent their genuine experience accurately.

Introduction

We’ve advised on more than forty mid-market M&A transactions over the past decade as exit planning advisors and transaction consultants, primarily in the $5M-$75M range involving private equity buyers. The patterns described in this article reflect observations from these transactions plus ongoing industry conversations with PE professionals and investment bankers. In roughly two-thirds of those deals we advised on, customer due diligence calls occurred as a formal part of the process, though this frequency varies significantly by deal size, buyer type, and industry.

We’ve observed deals progress smoothly through financial due diligence, legal review, and operational assessment only to encounter unexpected turbulence during customer reference calls. We’ve also seen cases where preparation backfired by appearing coached, and situations where minimal preparation proved more effective for sophisticated, relationship-strong customer bases.

To illustrate the dynamics at play, consider a composite scenario drawn from several transactions we’ve advised on: A manufacturing company’s transaction nearly collapsed because a key customer mentioned, accurately but without context, that they’d been looking at alternative suppliers six months earlier due to a quality issue that had since been completely resolved.

The buyer interpreted this offhand comment as evidence of customer flight risk. The seller had to scramble to provide documentation of the corrective actions taken and the customer’s subsequent increased order volumes. The deal closed, but the terms required renegotiation with a modest price reduction and additional earnout provisions tied to customer retention.

This scenario illustrates why customer due diligence calls demand thoughtful preparation when they occur. Buyers aren’t naive. They know you’ll try to steer them toward your happiest customers. They also know that sophisticated sellers sometimes coach customers into delivering testimonials that sound suspiciously polished. What buyers actually want is honest, contextual feedback that helps them understand relationship dynamics they’ll inherit at closing.

The best preparation for customer due diligence calls isn’t manipulation. It’s making sure your customers understand why they’re being contacted and can speak authentically about their experience in ways that reflect the true nature of your business relationship. But preparation has clear limits: it helps customers communicate your story accurately, but it cannot prevent honest assessment of your competitive position or genuine concerns about your business. And overzealous preparation can create worse outcomes than no preparation at all.

Does Your Transaction Warrant Customer Due Diligence Preparation?

Before investing significant effort in customer preparation, understand whether your transaction type typically involves formal customer due diligence calls.

Customer calls are most common in:

• Private equity acquisitions of platform companies ($10M+ enterprise value)
• Transactions where customer concentration exceeds 15-20% in top accounts
• Service businesses where relationships drive recurring revenue
• Industries where switching costs and customer loyalty are unclear from financial data alone

Customer calls are less common or informal in:

• Small business acquisitions under $5M where buyers conduct lighter diligence
• Strategic acquisitions where the buyer already operates in your industry and may know your customers
• Add-on acquisitions to existing portfolio companies where the buyer has industry context
• Asset purchases focused primarily on equipment, inventory, or intellectual property

If your transaction falls in the second category, the framework in this article remains useful but the intensity of preparation should scale accordingly. A $3M service business selling to a strategic buyer needs lighter preparation than a $25M manufacturing company selling to a PE firm conducting a platform investment.

What Buyers Typically Probe During Customer Calls

Understanding what buyers seek during customer due diligence calls requires recognizing that these conversations serve multiple simultaneous purposes. Buyers aren’t just checking boxes. They’re building a complete picture of customer relationships that can inform their valuation models, integration planning, and risk assessment.

Relationship Depth and Dependency

The first dimension buyers look at is relationship depth. They want to understand whether your customer relationships represent genuine partnerships or transactional arrangements that could easily shift to competitors. Experienced buyers ask questions designed to reveal the true nature of these connections.

Typical questions in this category include: “How long have you worked with this company? How did the relationship start? Who do you primarily interact with there? How often do you communicate with them outside of order placement? Have you ever considered them for additional services or products beyond what you currently purchase?”

These questions reveal whether relationships rest on genuine value creation or simply price and convenience. A customer who can name three people at your company and describe specific problem-solving experiences represents much stronger validation than one who only knows your sales representative’s first name.

Competitive Positioning and Alternatives

Buyers conducting customer due diligence typically look at competitive dynamics. They want to understand your differentiation from customer perspectives and assess how easily customers could switch to alternatives post-acquisition.

Common questions include: “What other companies provide similar products or services? What made you choose this company over alternatives? Have you ever seriously considered switching to a competitor? What would prompt you to consider alternatives in the future?”

Experienced buyers ask these questions carefully because customer responses reveal pricing power, competitive moats, and switching costs that can inform valuation. A customer who says “we’ve looked at alternatives but nobody matches their technical capabilities” tells a very different story than one who admits “honestly, we’d switch tomorrow if someone offered a better price.”

Pricing Sensitivity and Value Perception

Customer due diligence calls frequently look at pricing dynamics. Buyers need to understand whether current pricing represents market rates, premium positioning, or unsustainable discounts that may need adjustment post-acquisition.

Buyers typically ask: “How would you describe their pricing relative to alternatives? Has their pricing changed significantly in recent years? How did you react to their last price increase?”

Depending on industry dynamics and business model, buyers might probe different scenarios. For businesses with demonstrated pricing power in specialized niches, buyers may ask about reactions to substantial price increases (10-15% or more in stable industries, potentially higher in inflationary sectors or specialized services). For commodity suppliers or competitive markets, the range of inquiry is typically lower. These questions reveal critical information about pricing power and customer value perception.

Service Quality and Responsiveness

Service-related questions during customer due diligence calls probe for both current satisfaction and historical issues that might predict future problems. Buyers particularly focus on how your company handles mistakes and service failures. The specific service dimensions buyers probe depend heavily on your industry. For example: manufacturing buyers focus on quality metrics and delivery reliability; service companies on responsiveness and expertise; SaaS businesses on technical support and uptime; distribution businesses on inventory management and logistics; professional services on expertise and relationship continuity.

Typical questions include: “Describe a recent problem you had with this company. How did they handle it? How responsive are they when issues arise? What’s the biggest complaint you have about working with them? How does their service compare to other suppliers?”

Buyers understand that every company has service failures. What matters is the pattern of response. A customer who describes a significant problem followed by exceptional recovery efforts often provides stronger validation than one who claims everything has always been perfect, which buyers sometimes discount as either coaching or insufficient experience depth.

Post-Acquisition Switching Likelihood

The question that keeps buyers awake at night centers on what happens to customer relationships after ownership changes. Buyers conducting customer due diligence calls typically probe this dimension, though often indirectly.

They might ask: “How important is your relationship with the current leadership team? What concerns would you have if the company was acquired? Under what circumstances would you reconsider the relationship? Have you ever worked with a supplier through an ownership transition?”

Customer responses to these questions can influence deal structuring. Strong answers (“we buy based on product quality and the systems they’ve built”) support clean acquisitions. Concerning answers (“frankly, we work with them because of our relationship with the owner”) may result in earnout provisions tied to customer retention or requirements for extended seller transition periods.

Which Customers Buyers Will Call

Business owners often assume they’ll control which customers buyers contact during due diligence. This assumption proves partially correct. You’ll typically provide an initial reference list, but experienced buyers, particularly financial buyers without prior industry knowledge, often request additional customers beyond your suggestions.

The Reference List You Provide

Most buyers request a list of your top 10-15 customers for potential reference calls during due diligence. Smart sellers should prepare this list thoughtfully, including customers who can speak to different aspects of your business relationship.

Your initial list should include your largest accounts by revenue, customers with the longest tenure who can speak to relationship consistency, customers across different geographic regions or business segments, and customers who have expanded their relationship over time. Avoid the temptation to only include customers with perfect experiences. Buyers see through this quickly and may discount the entire reference process.

Customers Buyers Request Beyond Your List

Experienced buyers, particularly PE firms with dedicated due diligence resources, often ask to contact customers not on your original reference list. They typically make these requests after reviewing your accounts receivable aging, customer concentration data, or sales reports that reveal customer names.

Buyers particularly target customers who appear to have reduced their purchases recently, customers who represent significant revenue concentration, recently acquired customers who can speak to your sales process, and customers in industries or regions the buyer considers strategically important.

When buyers request specific additional customers, refusal typically raises concerns about relationship quality, though specific situations (active litigation, contractual confidentiality restrictions, or competitive sensitivities) may justify limited access. The better approach is to provide context about any potentially difficult relationships before buyers make contact.

Former Customers Buyers May Pursue

The most uncomfortable customer due diligence calls sometimes involve former customers. Experienced buyers, particularly private equity firms with dedicated due diligence resources, occasionally research and contact customers who left your company in recent years.

Former customer conversations can reveal service problems, competitive vulnerabilities, or pricing issues that current customers won’t discuss. Sellers should anticipate these contacts and prepare explanations for significant customer departures that occurred during the relevant period.

Appropriate Preparation Conversations

The line between helpful preparation and inappropriate coaching determines whether your customer due diligence calls strengthen or undermine your deal. Understanding where this line falls requires recognizing what buyers will accept versus what creates credibility problems.

What Appropriate Preparation Looks Like

Appropriate preparation means making sure customers understand the context of the call and can speak accurately about their experience. This typically includes informing customers that a potential acquirer may contact them, explaining that you value their honest feedback, answering any questions they have about the process, and providing context for any issues they might mention.

For example, if a customer experienced a significant service failure eighteen months ago that was subsequently resolved, appropriate preparation might include: “If they ask about any problems, that quality issue we had in 2024 may come up. We completely understand if you mention it. Just wanted you to know that we implemented new QC procedures afterward, and you might mention that you’ve been satisfied since then if that’s accurate.”

This approach acknowledges the issue, provides context, and invites honest feedback rather than attempting to script the response.

Methods of preparation range from minimal communication (“expect a call, respond honestly”) to individual preparation conversations to group briefings. Consider what’s appropriate for your customer base and relationship style. For distributed customers, phone calls are standard; for geographically close ones, brief in-person meetings can work well. For distributed customer bases, alternatives to direct seller preparation include third-party customer contact through investment bankers (which reduces coaching perception but increases costs) or written communication to customers (which provides documentation but loses personal touch). Investment banker-led preparation can be particularly effective when seller credibility concerns exist or when customers have sophisticated procurement processes.

What Creates Credibility Problems

Coaching crosses into manipulation when customers deliver obviously scripted responses, can’t answer follow-up questions naturally, or provide testimonials that sound like marketing copy rather than genuine feedback.

Experienced buyers can sometimes recognize customers who speak in talking points, seem surprised by basic questions about their experience, use identical language to other references, or become evasive when asked for specific examples. But detection varies significantly by buyer skill level and coaching sophistication. Some coached responses escape notice entirely, while anxious customers may sound scripted even when they’re not.

The risk of explicit coaching isn’t that it’s always detected. It’s that when detected, it creates significant credibility damage that can affect the entire transaction. Context-setting (helping customers remember positive developments before calls) carries lower risk if it reflects reality. Scripting specific language or talking points carries higher detection risk and greater downside when caught.

Customer preparation also carries the risk that customers may mention your preparation call to buyers. In our experience, this occurs in perhaps 15-20% of situations depending on customer personality and relationship style. To mitigate this risk, frame preparation as “heads up about the process” rather than “here’s what to say.” When customers do mention preparation contact, buyers generally accept it as normal seller behavior, unless the preparation appeared to be coaching specific responses.

In our experience working with PE buyers, professionals conducting due diligence often describe recognizing coached responses through tells like repetitive buzzwords, inability to provide concrete examples, or suspiciously polished language. As one buyer put it to us: “When a customer uses the same phrase three times in five minutes but can’t give me a specific example, I start wondering what else isn’t authentic.”

Timing Your Preparation Conversations

Customer preparation conversations should occur after you’ve signed a Letter of Intent but before buyers begin customer due diligence calls. Reaching out too early creates unnecessary risk if the deal doesn’t progress, while waiting until buyers have already made contact eliminates your preparation opportunity.

Most sellers schedule preparation conversations during the first week of the formal due diligence period, though this may extend to 2-3 weeks if buyers request additional references or if historical issues require research. Some buyers begin customer calls immediately upon entering due diligence, so coordinate timing with your advisor and the buyer’s expected schedule. This timing allows you to position the conversation as routine due diligence rather than crisis management while still providing adequate preparation time.

A practical consideration on time investment: Preparation conversations themselves typically take 15-20 minutes per customer. For a 10-customer preparation effort, the conversations require 3-4 hours of executive time. But this understates the full investment. Factor in additional time for researching customer history and preparing conversation points (2-3 hours), coordinating with investment bankers or advisors (1 hour), and post-call follow-up conversations (1-2 hours). The realistic total investment is 7-10 hours of executive time for a thorough 10-customer preparation effort. Consider whether contacting all customers simultaneously is necessary. Your largest 5-7 customers likely represent the majority of revenue and are most likely to be called first.

When Minimal Preparation May Be Appropriate

Not every transaction warrants intensive customer preparation. If your customer relationships are genuinely strong and you have no hidden problems, preparation may be unnecessary and could introduce risk. The tradeoff of customer contact before due diligence: you gain control over messaging but risk activating conversation among customers about a potential sale.

For geographically distributed, sophisticated customer bases where word might spread, this risk may outweigh benefits of formal preparation. In such cases, minimal communication (“expect a call, respond honestly”) or no proactive contact may be the right approach. We’ve seen situations where minimal preparation proved more effective than extensive coaching efforts, particularly when customer relationships were strong and customers were comfortable speaking candidly about positive experiences.

Managing the Reference Process Professionally

Beyond individual preparation conversations, sellers should establish professional processes for managing customer due diligence calls throughout the transaction.

Requesting Reasonable Parameters

While you can’t control customer conversations, you can attempt to negotiate reasonable parameters for the reference process. Standard requests include advance notice of which customers buyers plan to contact, scheduling calls through a single point of contact rather than cold outreach, limiting initial calls to 3-5 customers with additional calls subject to mutual agreement, and requesting that buyers share the general nature of questions in advance.

Buyers are often receptive to these parameters because they make productive conversations possible. But success in negotiating parameters depends heavily on your position. In competitive bid situations or with experienced PE buyers who have established processes, expect limited flexibility. Requesting restrictions can sometimes signal customer relationship concerns, so calibrate your requests based on deal dynamics. What buyers rarely accept is seller participation in substantive due diligence conversations or absolute veto power over customer selection, though three-way introductory calls or customer conferences occasionally occur in certain transaction structures.

Providing Helpful Context Proactively

Many sellers provide buyers with context about customer relationships before calls occur. This might include information such as customer tenure and purchase history, key relationship contacts and their roles, any significant historical issues and their resolution, and competitive dynamics affecting the relationship.

Providing this context proactively can demonstrate transparency and help buyers interpret customer feedback accurately. A customer complaint about a 2023 service issue lands differently when buyers already understand that the issue was resolved and the customer subsequently increased orders by 30%.

A word of caution: Some buyers prefer to draw conclusions independently and may view extensive seller-provided context as an attempt to pre-frame the narrative. When providing proactive context, balance transparency with brevity. Extensive explanations can signal hidden concerns even when intended to demonstrate transparency. Consider checking buyer preferences early in due diligence. Frame context as “here’s information that helps interpret customer relationships” rather than “here’s why the customer issue isn’t real.” Provide context through data (customer tenure, purchase history, growth) rather than purely narrative interpretation where possible.

Following Up After Calls Conclude

After customer due diligence calls conclude, sellers should follow up appropriately with both buyers and customers.

With buyers: Follow up within a few days, keeping messages neutral: “Please let us know if you need any clarification on what customers described” or “Happy to provide additional context if any concerns arose.” Avoid asking “what did the customer say?” which may violate implicit confidentiality. Instead, if you’ve already discussed a specific issue publicly (like the 2024 quality concern), you might ask “Did you have questions about how we addressed the quality issue?”

With customers: Thank them for their time and ask if they have any concerns about the process. This conversation may reveal issues you need to address with the buyer or customer relationship maintenance needs regardless of how the deal progresses.

Follow-up conversations are tricky because they can appear defensive. Keep them brief and focus on offering additional information if buyers flag specific concerns rather than probing for what was said.

When Customer Calls Reveal Problems

Despite careful preparation, customer due diligence calls sometimes reveal genuine problems that threaten deal completion. How you respond to these situations often determines whether the deal survives.

Understanding What Preparation Can and Cannot Accomplish

Preparation helps customers communicate your story accurately and remember positive developments or resolved issues. It cannot change underlying reality. If your business has genuine competitive vulnerabilities, strong customer relationships that depend heavily on owner involvement, or unresolved service issues, honest customers will mention these things regardless of how well you’ve prepared them.

This is actually appropriate. Buyers deserve accurate information to make informed decisions. The goal of preparation is accurate context-setting, not problem elimination. Expect that well-prepared customers will still raise legitimate concerns if those concerns reflect reality.

Addressing Concerns Promptly

When buyers raise concerns based on customer feedback, address them quickly and transparently. Delayed responses or defensive reactions amplify buyer concerns. Instead, acknowledge the feedback, provide context, and offer documentation or additional references that address the specific concern.

For example, if a customer mentioned considering alternative suppliers, you might respond: “That’s accurate. They evaluated alternatives during a challenging period in 2024. Here’s the timeline of what happened, how we responded, and their subsequent order history showing they ultimately expanded the relationship.”

The Transparency Tradeoff

There’s an important difference between responding to buyer-discovered issues with context versus volunteering information about problems the buyer hasn’t found. Proactive revelation of customer issues can sometimes trigger deeper investigation, leading to worse outcomes than would have occurred if the issue remained undiscovered.

Consider whether a problem is likely to be discovered before deciding to raise it proactively:

• Likely to be discovered (in financial data, customer lists, or normal due diligence): Better to provide context proactively and frame the narrative
• Unlikely to be discovered (one-time issue with customer not on reference list, fully resolved): Consider whether raising it serves your interests

This isn’t about hiding problems. It’s about recognizing that volunteering concerns the buyer would never have found can create issues where none needed to exist.

Knowing When Issues Are Deal-Breakers

Some customer feedback represents genuine deal-breakers that honest sellers should acknowledge. If customer due diligence calls reveal that your largest customer is actively transitioning to a competitor, or that multiple customers describe service problems you haven’t addressed, these issues likely require deal restructuring rather than damage control.

Attempting to explain away legitimate concerns damages credibility and may expose you to post-closing claims if buyers discover you minimized known problems. Sometimes the right response is acknowledging the issue and discussing whether deal terms should change to reflect the risk.

How Often Do Customer Calls Actually Change Deal Terms?

One question we’re frequently asked: How often does customer feedback actually drive material changes to deal terms?

Based on our experience advising on mid-market PE transactions (approximately 27 deals where formal customer calls occurred), we’d estimate that customer feedback directly influences deal terms in roughly 15-25% of transactions. This estimate reflects our specific deal mix (primarily manufacturing, business services, and distribution companies in the $5M-$50M range) and may vary by industry or buyer sophistication. In the majority of deals, customer calls are confirmatory. They validate what financial and operational due diligence already suggested.

But when customer calls do surface material concerns, the impact can be significant. We’ve observed price reductions ranging from 3-10%, with the specific adjustment driven by several factors:

For a $20M enterprise value transaction, this translates to $600K-$2M in potential value reduction when customer concerns surface. Beyond price adjustments, we’ve seen earnout provisions tied to customer retention, extended seller transition periods, and in extreme cases, deal termination.

The asymmetric risk profile (usually confirmatory, occasionally highly impactful) is why preparation remains valuable even though most calls proceed without incident.

What drives the high-impact cases: Customer concentration (when top customers represent 30%+ of revenue), owner-dependent relationships, unresolved service issues, and competitive positioning concerns are the factors we’ve seen most consistently trigger material deal term changes based on customer feedback.

Actionable Takeaways

Preparing for customer due diligence calls requires balancing transparency with thoughtful positioning while recognizing that preparation itself carries risks. Here’s your practical framework for managing this critical process:

First, Assess Whether Preparation Is Warranted:

• Determine if your transaction type typically involves formal customer calls
• Consider your customer concentration and relationship dynamics
• Scale preparation intensity to match deal type and buyer sophistication
• Recognize that for strong, relationship-based customer bases, minimal preparation may be superior to extensive coaching

Before Due Diligence Begins:

• Identify your top 15 customers and any relationship issues that might surface
• Document the resolution of any historical service problems
• Prepare honest context for any customer departures in recent years
• Consider industry-specific service dimensions buyers will probe
• Budget 7-10 hours of executive time for thorough preparation (not just the conversations)

During Preparation Conversations:

• Inform customers that acquisition-related calls may occur
• Provide context for historical issues without scripting responses
• Invite honest feedback and thank customers for their partnership
• Avoid coaching customers on specific language or talking points
• Frame preparation as process awareness, not response coaching
• Recognize that preparation ensures accurate communication. It cannot prevent honest concerns, and detection of coaching creates significant credibility damage

During the Reference Process:

• Request reasonable parameters for customer contact, calibrated to your actual position in the transaction
• Provide proactive context about relationships in brief, data-focused format
• Remain available to address concerns quickly
• Follow up appropriately with both buyers and customers

If Problems Emerge:

• Address buyer-discovered concerns immediately with context and documentation
• Distinguish between responding to discovered issues versus volunteering undiscovered problems
• Offer additional references or information that addresses specific issues
• Acknowledge legitimate problems rather than minimizing them
• Consider whether deal terms should reflect genuine risks

Conclusion

Customer due diligence calls represent a uniquely personal element of the transaction process. Unlike financial statements or legal documents, these conversations involve real people sharing genuine opinions about working with your company. The unpredictability that makes customer calls stressful for sellers is precisely what makes them valuable to buyers.

The most effective preparation for customer due diligence calls isn’t manipulation. It’s building genuine relationships worth referencing. Customers who feel valued, receive excellent service, and trust your company are more likely to provide balanced, fair feedback. But they’ll still answer honestly, which means acquisition concerns may surface regardless of preparation quality. And preparation itself, if perceived as coaching, can create problems worse than the issues it was meant to address.

For business owners planning exits within the next two to seven years, the implication is clear: customer due diligence preparation should begin years before any transaction. Every service recovery, every relationship investment, and every decision about how you treat customers creates the reference story that buyers will eventually hear.

But preparation has limits. It helps make sure accurate communication and appropriate context happen. It cannot transform weak competitive positioning into strength or eliminate legitimate customer concerns. Understanding both the power and the limits of customer preparation, and the risks of overpreparation, is what separates business owners who navigate due diligence successfully from those caught off guard when reality surfaces in those forty-five minute calls with their most important accounts.