Specify who would buy what after the acquisition
An acquisition can bring together complementary offerings and different customer relationships. To assess the cross-selling opportunity, the investment team needs a more specific proposition: which existing customers would buy which additional product or service, for what purpose and under what conditions?
Write each direction separately. Customers of the acquirer may have different needs from customers of the target. An attractive opportunity in one direction does not establish the same opportunity in the other.
Establish the customer need before presenting the combined offer
Begin with the customer's work and current choices. What decision does the existing service support? Which information or capability is missing? How is that need addressed today, and who controls the budget? These questions provide a basis for assessing whether the other company's offering is relevant.
Present the proposed addition in terms respondents can evaluate without implying that the acquisition or bundling is preferable. Where protecting the sponsor's identity matters, screening and discussion materials should avoid revealing the transaction through unnecessary detail.
Follow stated interest through the purchasing conditions
Interest in an additional service is useful evidence, but the investment case also needs to understand the conditions for purchase. Ask which part of the offer would be used, how it fits existing subscriptions or suppliers, and whether the proposed user has influence over spending.
Separate the value of individual services from the appeal of having them under one provider. Customers may want a specific capability without wanting a broad bundle. That distinction affects packaging, pricing discussions and the cost of serving the additional demand.
A chemicals information-services acquisition illustrates the distinction
In CovalentIQ's published acquisition-rationale assignment, a provider serving chemical and polymer producers was considering acquiring an information provider serving packaging converters and consumer brands. Interviews and a survey tested whether each customer group would buy the other company's services.
Respondents valued granular supply-and-demand intelligence but wanted to select the information services relevant to their work. For the prospective acquirer, the finding made the opportunity more specific: it needed to identify the services that met a need within each customer group. Combining the portfolios alone did not establish demand for the full offering.
Use the transaction timetable to focus the research
Expert and customer interviews can clarify the use cases, buying process and alternatives. A survey can then compare responses across the selected groups using a consistent description of the offer. Where time is short, prioritize the hypotheses that could materially change the acquisition rationale.
Coverage matters as much as the number of responses. Keep the two customer populations identifiable and examine differences within them. An average across the combined sample may hide an attractive segment or overstate the opportunity in the weaker direction.
Carry the purchase conditions into the revenue scenarios
The commercial due diligence should identify the strongest use cases, the customer groups they apply to and the conditions required to win business. The financial model can then test adoption, timing and commercial assumptions on that basis. Expressed interest should retain its meaning when translated into those scenarios.
CovalentIQ can undertake the customer research as a focused assignment or combine it with modeling and advisory. The scope should follow the investment question and the evidence needed before the transaction decision.