Customer-Contract Liability Diligence Director

The mandate

An investment firm is acquiring an enterprise workflow vendor that reports strong prepaid billings and low churn. Large agreements include consumption credits, delayed implementations, service-level penalties, termination-for-convenience clauses, price protections and free renewal periods negotiated outside standard order forms. The deferred-revenue ledger measures accounting release, but not necessarily the future delivery cost, refund risk or cash needed to fulfil acquired promises.

The engagement lasts twelve weeks and its primary deliverable is a customer-obligation population, economic liability model and purchase-case adjustment pack. Milestone one fixes contract and ledger completeness by week three; milestone two maps promises and remedies by week six; milestone three quantifies fulfilment, refund and renewal economics by week nine; milestone four delivers investment cases and Day One control priorities.

The client will provide signed agreements and amendments, CRM and billing extracts, deferred-revenue schedules, credit consumption, implementation backlogs, support incidents, service-level reports, renewal concessions, refunds, cash collection, cost-to-serve data and counsel-approved clause categories. Acceptance requires material cohorts to reconcile across contract, bill, cash, revenue and outstanding performance, with three sampled liabilities reproduced by client finance.

Excluded are legal interpretation, audit opinion, tax advice, code or service-quality certification, customer negotiation, purchase-price determination and post-close implementation. The team may quantify scenarios for clauses categorised by counsel, but cannot decide enforceability or direct target personnel. Customer interviews require seller permission and must not reveal transaction intent beyond authorised protocols.

Outputs will separate accounting contract liability, economic fulfilment burden, cash refund exposure, commercial concession and uncertain claim. Cohorts must retain customer, product, geography, implementation state, credit ageing, remedy and source lineage. A changed bid perimeter, broad code assessment, or remediation after closing requires a new commission rather than informal scope extension.

Why this is external work

Conventional quality-of-earnings work can reconcile deferred revenue without measuring the cost and optionality embedded in customer promises. The target’s commercial teams negotiated bespoke terms across systems, while the buyer has limited secure access before signing. Specialist outside analysis can quantify obligation economics quickly without interpreting contracts or disrupting customer relationships.

What you will own

• Reconcile contract, amendment, bill, collection, revenue, credit and implementation populations across material customers and cohorts.
• Catalogue prepaid units, consumption rules, expiry, rollover, refund, termination, price-protection, renewal and service-remedy provisions.
• Quantify remaining delivery effort for implementation, migration, support, hosting, custom development and committed success services.
• Analyse unused credits, stalled deployments, disputed acceptance, service penalties and concession history for future cash or margin exposure.
• Separate reported deferred revenue from economic liability, debt-like claims, normal operating obligations and commercial retention choices.
• Model purchase-case effects under accelerated consumption, refund demand, delayed go-live, free renewal and elevated support scenarios.
• Deliver the obligation register, cohort model, source archive, limitation log and Day One contract-control priorities.

Candidate qualifications

• Led software transaction diligence focused on customer contracts, deferred revenue and remaining performance obligations.
• Reconstructed prepaid-credit, implementation and service economics from agreements, product usage, billing and delivery evidence.
• Distinguished accounting balances from fulfilment cost, refund exposure, retention concession and debt-like value transfer.
• Worked with counsel on clause categorisation without offering enforceability conclusions or negotiating customer remedies.
• Analysed bespoke enterprise arrangements across consumption, hosting, migration, support, acceptance and renewal incentives.
• Produced cohort-level liability models and evidence trails that investment teams could update after restricted diligence access.

Non-negotiables

• Can complete the Lisbon-led analysis and two authorised customer-reference visits inside twelve weeks.
• Will disclose target, buyer, customer, investor, auditor, adviser and competing software interests before data access.
• Brings enterprise-software obligation diligence beyond headline deferred-revenue reconciliation or recurring-revenue review.
• Accepts no legal interpretation, customer negotiation, technical certification, audit opinion or purchase-price authority.

1. 49 words maximum. Describe a prepaid customer cohort whose economic obligation exceeded its deferred-revenue balance.
2. 49 words maximum. Which evidence best quantifies unfinished implementation effort at a software acquisition target?
3. 49 words maximum. How would you separate refundable exposure from a discretionary retention concession?