Private Equity

With the large acquisition premiums paid upfront,
firms need to buy at the right price, generate value
quickly, and sustain value creation over the long term.

Strategic focus on four phases of the investment process.

Profitable deals call for the formulation of a clear strategy that lays out the strategic rationale for the deal and identifies the amount of the targeted value creation. We address with the following questions:

- How does the transaction fulfill the firm’s strategic objectives?
- What is the strategic rationale for the deal?
- How much value will it create? Over what period?
- What is the financial attractiveness of the deal?

Answers to these questions shed light on critical issues of economic value creation.
Often companies may look good externally and not so right after the acquisition. Strategic due diligence achieves two important objectives:

- Soundness: A forward-looking analysis of the target’s cash flow determines if the M&A deal is a sound investment. The objective is to uncover potential problems with the company’s future value and minimize the risk of negative surprises.

- Value: A valuation determines the true value creation potential of the M&A deal and informs the negotiation process. The acquirer can add value in two different ways: (1) managing the stand-alone company more efficiently, (2) or integrating it with the buyer’s business to derive synergies.

The ultimate objective is to execute a sound M&A deal at the right price.
The key to creating value rests with ongoing performance improvement that goes beyond cost reduction. The lion-share of value creation comes in the form of profitable growth generation, including pricing, adjacency expansion, channel mix strategy, product bundling, sales effectiveness, and much more – tools historically at the hand of public corporations completely accessible for private equity firms to profit.
The value of a company and what someone is willing to pay for it depends on many variables. To truly leverage the opportunities available to a seller, exit planning should start years in advance. Several exit strategies can maximize the amount of income the seller can derive from a business, including strategic sales, IPO, and sponsor-to-sponsor transactions.

Case Studies

Strategic due diligence in logistics technology

Revealing that a target company that looked good on the outside would not be so right after the acquisition.

Synergy estimation across pharmaceuticals and consumer products

Defining the strategic rationale for merging order management systems across seven divisions and quantifying the synergies.

Driving strategy execution with strategic planning in IT Services

How IT Services Co. drove strategy execution by quickly getting the right strategic initiatives on the table, measured, planned, staffed, resourced, and committed-to, company-wide.

Using strategic alliances to grow sales in wide area networking software

How a fast-growth high-tech company and primary innovator drove sales 10X in two years through multiple strategic alliances.