Why verifying that shareholders and customers actually exist is the most overlooked step in M&A due diligence.
There is a moment in almost every acquisition that nobody talks about. The legal teams have done their work. The financial models have been stress-tested to within an inch of their life. The press release is already half-written. And somewhere in a folder, often treated as an afterthought, sits the customer list. Or the shareholder register. The list that supposedly represents the human beings this entire deal was built around.
Nobody verifies it.
Not really.
A few years ago we were retained by a regional truck dealership group that had grown aggressively by acquisition, eleven stores in a relatively short span of time, gobbling up family-owned operations one by one. Good businesses. Some of them had been around for fifty years. Loyal customers. Deep community roots. Real relationships built across decades.
What the group didn’t know, couldn’t know from a spreadsheet, was whether those customers still existed. Whether the phone numbers still worked. Whether the long-standing contact at that fleet account had retired, moved on, or simply never been updated since the previous owner kept everything in a ledger on his desk.
We made thousands of calls. And what came back wasn’t just updated data. It was intelligence.
On one particular store, the last one the group handed us, and the one they’d been most reluctant to give us — we started hearing the same thing on call after call. Not anger about the acquisition. Not concern about billing or continuity. Something else entirely. The customers hated the service manager. Every single one of them. And almost all of them were thrilled the new group had taken over, specifically because they were hoping someone would finally deal with it.
The VP of Marketing called us shortly after we delivered that finding. He said, and I’m paraphrasing: “We would never have known this if it wasn’t for you.”
That’s the thing about due diligence. In its current form, it is exceptional at answering financial questions and almost entirely useless at answering human ones. How many of these customers are still there? Are they happy? What do they think of the people running the operation they just became part of? What are they about to do — stay, or quietly drift away?
The customer didn’t ask for the M or the A. They didn’t vote on it. They found out when they called to book a service appointment and a different name came up on their phone.
That’s not a data problem. That’s a relationship problem. And relationship problems, left unattended, become revenue problems very quickly.
The research backs this up. McKinsey found that the average merging company loses between two and five percent of its combined customers in the immediate post-close period, and that’s considered typical. A single large US bank acquisition they studied resulted in far greater losses because thorough due diligence on the target’s customer base would have revealed something critical: those customers were heavy branch users and highly likely to defect. Nobody found that out until it was too late.
The fix isn’t complicated. It requires treating the contact list with the same scrutiny as the balance sheet. That means picking up the phone. Confirming the record is real, the person is reachable, and asking how they feel about what just happened to them.
In almost every outreach we’ve ever done in an M&A context, the number one question we get isn’t about billing, or service, or continuity.
It’s: “Why didn’t someone call me?”
That question is the sound of a customer on the fence. Answer it well, with a real human who treats them like a person, and you keep them. Ignore it, or leave it to an automated email sequence, and you’ve already started losing them.
Due diligence that ends at the spreadsheet isn’t due diligence. It’s a very expensive bet that nothing important was hiding in the data nobody thought to check.
