Optimizing performance and expansion: Baker Tilly's strategic market and customer diligence solutions for a B2B software provider

Client need

A lower-middle market private equity firm was evaluating the acquisition of a B2B software provider, serving the collections industry. The target offered workflow and communication tools for organizations managing uncollected debt.

Baker Tilly was engaged to conduct market and customer diligence to support the sponsor’s go/no-go decision and provide supporting analysis to equity and debt financing partners.

Baker Tilly solutions

Our approach blended interviews, surveys, expert calls, product testing and financial modeling to build a multidimensional view of the market and customer behavior. Key activities included: 

• A Voice of Customer program, including 17 in-depth interviews representing nearly 20% of revenue 
• Expert interviews to validate internal insights and explore switching behavior between in-house and third-party solutions 
• Competitor demos to evaluate usability, rules engine flexibility and edge case functionality 
• A bottom-up market sizing model that segmented demand by type of debt holder, institution size, vended solution usage and average selling price 
• A buyer group segmentation framework using a 10 point scoring model based on volume of debt, complexity of workflows, likelihood of in-house tooling and switching frequency .

Results

The investor group completed the acquisition and achieved a successful exit within 18 months, supported by the growth trajectory and strategic clarity identified through the diligence process. 

Baker Tilly utilized its deep B2B software experience to provide clear answers to the client’s diligence priorities. Key takeaways included: 

• Market size and reach: The total market was large and diverse, with demand across multiple types of debt holders. 
• Growth potential: Large banks (>$50B in assets) represented the most attractive expansion segment. Debt collection agencies offered volume but required greater feature depth and pricing flexibility. 
• Adoption patterns: Banks and credit unions typically relied on third-party vendors. In contrast, many collection agencies still used in-house systems built in the 1980s or 1990s. 
• Target differentiation: The target’s workflow tools were widely seen as best-in-class, though its omni-channel communication features lagged behind some competitors. 
• Competitive landscape: Few direct competitors existed, but several substitutes—including modules from core banking systems—offered limited functionality at lower price points. 
• Market momentum: Diligence surfaced accelerating adoption trends and secular tailwinds in the collections space, particularly among larger institutions with rising compliance and efficiency needs.
  
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