Private Equity
Strategy and execution support.
- Industry Sub-Sectors
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 M&A 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 a target company may look good externally and not so right after the acquisition. Strategic due diligence goes hand in hand with financial due diligence and operational due diligence, and achieves two important objectives:
- Soundness: A forward-looking analysis of the target’s cash flow determines if the acquisition deal is a sound investment. The objective is to uncover potential problems with the future value of the target business 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 acquisition deal at the right price.
The key to creating value rests with ongoing performance improvement of the business 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 business 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.
How We Help
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.
Expansion in the global market of Wide Area Network software
How a fast-growth high-tech company and primary innovator drove sales 10X in two years through multiple strategic alliances.
