Client Success Spotlight
Beyond Due Diligence, Embracing a Strategic M&A Lifecycle How Market Strategy Group delivers holistic due diligence for one of the Midwest’s premier Private Equity firms on its most important and time-sensitive acquisitions. Making Smart Investments A Chicago-based Private Equity firm was looking at making an acquisition of a company in the construction industry. Given the cyclical nature of the construction industry, our client wanted detailed due diligence research beyond the typical financials done to ensure the investment would yield a return. Realizing that it would be important to investigate a multitude of factors relating both to the acquisition target and the market as a whole, the firm reached out to Market Strategy Group (MSG) for support. We conducted strategic due diligence that combined qualitative and quantitative research methods to provide our client a complete and inclusive perspective on the transaction. M&A As a Strategic Advantage Ensuring M&A success is more than just a competitive market scan. Treating M&A like a strategic capability can give companies an edge, and that is what Market Strategy Group helps its clients achieve. We help our clients think of the process holistically, as part of a larger business cycle To assess the desirability and viability of the investment within our client’s portfolio, we collaborated with our client through a rigorous four-stage process: 1. IN-DEPTH SECONDARY RESEARCH
2. INTERNAL CULTURE + FIT ASSESSMENT
Extensive interviews with management of the acquisition target to understand its strategic vision and fit within the portfolio of our client
Understand the target company’s market potential and performance relative to the greater construction market
© Market Strategy Group, 2017
June 2017 www. mkt-strat.com
4. CUSTOMER VALUE CHAIN DEEP DIVE Across customers, competitors, and suppliers of the acquisition target to understand its culture and ability to bring value to its end users
3. QUANTITATIVE MARKET ASSESSMENT Deep-dive interviews with potential customers and market experts, to gain primary knowledge about market dynamics, as well as perceptions and positioning relative to competitors of the target Assessed the current state positioning of the target company and how well it was differentiated against its competitive set. This included a quantitative assessment of market share, market penetration and correlation between market share and projected medium-term growth rates.
Interviewed current and prospect customers to understand their perceptions of the target’s products with regards to price, availability, relationship, customer service, etc. Analyzed customer buying behavior and identified the decision makers for the target company’s products.
IF CO. X SHOULD PLAY • Identify and classify any serious competitive threats to the acquisition target • Project growth potential over 5-year time frame.
HOW CO. X SHOULD PLAY • Determine strength of target company’s relationship with its current customer portfolio • Detail a prospect customer buyer journey’s and key customer value drivers.
Making Decisions Based on a Strategic Vision At the end of the engagement, our client had thoroughly investigated and vetted research, which allowed them to make a data-driven and confident decision to finalize the deal and purchase the target. Looking back on the success of the acquisition now several years removed, the data speaks for itself. Despite the inherently cyclical nature of the construction industry, this investment has hit growth projections since joining our clients portfolio and prompted two similar acquisition deals—and two similar due diligence projects for MSG—over the past year. Our Work in Private Equity Market Strategy Group has deep experience with Private Equity and Venture Capital firms looking to acquire ownership stakes in new companies or make improvements to existing portfolio companies. We have completed numerous projects in the Midwest with firms completing due diligence and revamping strategic direction and execution of existing portfolio companies.
About Market Strategy Group Market Strategy Group sees business differently. To us, winning isn't about going from Point A to Point B. It's about aligning three distinct dimensions — business direction, people & process, and markets & customers — to drive growth. Please contact me to chat: Alex Kruzel (alex.kruzel@mkt-strat.com). http://mkt-strat.com/
© Market Strategy Group, 2017
June 2017 www. mkt-strat.com