We hope that you enjoy GRAPH Papers® - our ongoing series covering best-practices for assessing market opportunities and conducting commercial due diligence.
The insights behind these short pieces derive from real-world diligence experience. Our aim is to help our team and our clients develop and apply “standard work” methods that lead to better deal outcomes. Some of the tips will apply to specific sectors or types of asset, but we expect that most will be of interest to everyone in the diligence community – given that so much of what determines deal outcomes ties back to business fundamentals.
If you would like to share your thoughts about our ideas, please reach out to us.
Take a look at the topics covered in past GRAPH Papers®.
The origins of this GRAPH paper are in recent client requests: with deal prices necessitating robust value creation plans, clients have been continually driving projects around EBITDA growth. As commercial specialists, we think about growing the top line as four factors:
Integrated Offerings will More Easily Provide Greater Returns than the Cross-Sell Opportunity
Many commercial diligence exercises and value gen plans based on platforms and add-ons (a plurality these days) call for testing customer interest in, and potential for, the “cross sale.” While cross-sale opportunities have value gen potential, I have seen scant evidence that even the better ones produce much more than modest returns and valuation yield - i.e., maybe an increase in earnings,…
Winning in the Swing States – Commercial Due Diligence Lessons from Political Strategy
This Thursday, 650 constituencies will go to the polls for the UK elections. But in all likelihood, the election will be won and lost in just 100 or so key marginal seats (or “swing states,” for US readers) - constituencies where the winning margin at the last election was less than 5% of the vote.
Assessing Price Sensitivity
Price sensitivity is a tricky subject to interpret correctly – doubly so in the tight timeframes common to current diligence windows. I’ve seen a lot of consulting reports that I believe misinterpret price sensitivity – either overstating or understating price in a ranking of decision makers’ Drivers of Choice. The importance of price in decision making is a critical question in any…
Understanding the Market Share Equation in Diligence and in Value Gen. Exercises
I’ve been reflecting on Mark's recent article about how to better capitalize on brand equity – and particularly about those situations where you can exploit untapped brand equity. Mark promotes a winning investment formula of investing in cases where “RBE > RMS,” i.e., a company whose Relative Brand Equity is greater than its Relative Market Share. These situations are sadly not…
The Greater Potential of Brand Equity Analysis to Drive Far More Significant Acquisition Returns and Deal Value
In every commercial due diligence assignment, clients reasonably expect a proper brand equity analysis. And yes, good diligence requires the requisite measures (i.e., relative brand familiarity, performance on the most important drivers-of-choice, likelihood to recommend/promote, etc.). Investment teams and the IC will always want to review these findings and take stock of the implications. But…
Dig into the Buzzwords…Early
Effective commercial diligence processes don’t boil the ocean - they focus on the most critical issues in a timely manner, and in an optimal order. One of the biggest barriers to doing so is the pitch’s use of buzzwords. I put together five examples of costly, non-obvious, buzzwords often presented by management and bankers - and my suggestions for what you should probe for early, in response…
Maximising the Effectiveness of Early-Stage Commercial Diligence
We’re seeing a pronounced shift - from clients across the Private Equity landscape – towards conducting more, and earlier, “pre-deal” commercial work.
Don’t Wait for the Findings, Align on the Yardstick…Upfront
It’s always a bit too much of a race – to pull together the issues, align on what matters most, and then deploy the activities to nail an effective electronic survey to supplement the interviews to measure the commercial diligence matters.
The Battlefront for the Keystone Position in an Ecosystem
Direct competition between ecosystems – iOS vs. Android; Google+ (soon to be defunct) vs. Facebook – is often studied and constantly the subject of various tech press and opinion pieces. There are many good reasons for this that all analogize to competitive tournaments: