You have a deal or a market opportunity in front of you. Three weeks of analysis before you commit capital or a year of your life.
Most evaluations fail at three points. Not on paper. In the market.
Pricing defensibility is harder to test than it sounds
A founder tests price by asking customers what they would pay. A buyer tests it by asking what the customer does if they don’t buy.
The first answer is what the seller charges. The second answer is the real ceiling.
When you ask “Would you buy this at 50k?”, the customer says yes because saying yes costs nothing. When you ask “What happens to your operation if you don’t solve this problem?”, you get a number. That number is what you can actually charge.
The test gets messier when resellers or partners are in the middle. A partner model can look sound on paper. The partner takes 40 percent, you take 60 percent, the end customer never sees your price. But when the partnership breaks, you discover the price depended on the partner taking that margin. The end customer was never ready to pay you directly. The pricing story worked because the partner subsidized it.
Push on this before you move. If the customer cannot absorb the full price without the partner, the channel is not a channel. It is debt.
Channels that work have structure; lists of relationships do not
A real channel has defined handoffs, documented economics, and qualification steps that repeat. A list of relationships is a Rolodex that dies when the person leaves.
Test the difference by asking how a deal flows from first conversation to contract. If the answer is “we call our contacts,” you have a list. If the answer is “we run them through our partner program, they submit proposals weekly, we track pipeline,” you have a channel.
The partnerships at an industrial SaaS platform were personality-driven. A deal moved when the right person picked up the phone and stalled when they did not. We built a five-stage partner playbook with scoring and standard legal templates. The next partner onboarded in half the time. The motion became teachable.
Without structure, the channel only works if the same people stay. That is not a scale problem. That is a resale problem.
Customer retention answers the real question
A buyer cares less about the sales story than whether customers stick. Retention tells you: Are you solving a real problem? Can the customer afford to keep paying? Does the product actually defensible?
You won’t have full churn data pre-deal. But you can ask: How long are contracts? What does the renewal language say? How many customers are you dependent on? A customer base where two accounts represent 40 percent of revenue answers a different question than one where your top 10 are 25 percent.
If the same customer is 60 percent of the revenue, the deal is not a business. It is a contract.
This is not diligence. Not a business plan. Not financial modeling. This is where you check first.
If the pricing story breaks, the channel is personality-driven, or retention does not hold, the deal does not improve with capital. Save yourself the three weeks.
