Deal execution – buy side, Value-creation
Price and deal structure
Change pricing and deal structure conversations through value-driven analytics while gaining rich insight into underlying client portfolio performance.
We worked with a banking client who was looking to purchase an African customer portfolio. The client needed greater clarity on the performance drivers of the customer book and how the overall performance was driven by the sustainability, pricing and activity of individual customers and customer segments. This was to ensure that the bid was priced and structured appropriately, after taking into consideration prospects around client retention and performance.
The challenge
Our client needed to produce robust forecasts and scenarios of the target business, taking into consideration the sustainability of client relationships and pricing. It wanted to understand key characteristics that drove revenue performance and how these impacted net margins, taking into consideration the management of the target’s cost base.
In particular, it wanted to look at customer performance profiles and how the retention of customers and customer segments impacted the net margin. It also wanted to compare client pricing arrangements over time and among different customers. As a result, understanding the behaviour of the core customer base over time was important.
Ultimately, the client needed to establish to what extent customer sustainability should impact pricing, how it should drive customer retention or how it should anticipate dealing with customer attrition.
The outcome
We were able to download large data sets on the customer book, covering transaction and balance details over several years. Using data cleansing, data manipulation and segmentation techniques we were able to create interactive visualisations and comparisons on the performance of individual customers and customer segments.
We were able to provide integrated views on how specific customers performed across various business divisions. The analyses were used to inform treasury analyses and margin modelling. The analysis revealed the core customer base, dependencies between business units and helped quantify the risk around client attrition.
We delivered analyses that proved fundamental in both the forecasting and the client’s wider due diligence process overall. The client could confidently analyse the target business and gain commercial understanding of the customer base. The output of the financial due diligence was used to inform not only the financial analyses and modelling of the target business, but also the commercial, operational and transition/integration analysis and planning.
