Preparation for sale and post-deal value creation
Understanding the competitive and client landscape
We acted as the financial adviser in connection with the strategic review of the client’s business operations.
The client had developed a successful business in a small region of the country but was looking to expand operations on a national scale to drive shareholder value with the view to enhancing the strategic position of the business in anticipation of a potential equity sale.
Our objective was to identify additional potential customer segments outside of the existing operating region which could be used as a pilot to prove the expansion business case, start capturing additional market share and ultimately enhance the narrative for a potential sale.
The challenge
The client needed to understand the various pricing structures of its main competitors in the market to identify target customers to whom it could deliver the product at more affordable rates. The competitor tariffs comprised numerous categories and costing structures dependent on various customer characteristics. The consolidated data set comprised over 7,000 tariff points.
The industry has also seen relatively high inflation annually, and the client needed to understand how a more sustainable year-on-year increase structure could be leveraged as a differentiating factor for its own product. The client also wanted to understand the extent to which it could offer different incentive structures (such as offering discounts) which would encourage customers to purchase its product.
We needed to develop a visual dashboard with this data and the various scenarios summarised to illustrate optimal target customer groups along with potential revenue projections. This dashboard would be used both as part of the internal decision-making process during the expansion phase, and as part of the narrative when marketing the business to investors.
The outcome
We leveraged data and analytics in the pre-deal phase of the proposed transaction to enhance both the client’s business case and the strategic narrative, which in turn is expected to enhance the valuation during the deal and create additional value to the existing shareholders.
Using data analytics, we created a tool that allowed us to consolidate all the tariff data points from each of the competitors to allow for easy interpretation and comparison across the entire industry, allowing us to demonstrate optimal pricing based on specific customer characteristics. Through this analysis we were able to identify tariff structures with the highest potential margin for our client.
Our work enabled the client to understand its business operations and challenges from a different perspective as well as to understand certain trends in the market which would inform its strategy for future expansion.
Our work also allowed the client to identify pilot cases which could be rolled out to prove the business case for rapid expansion, to be used as a ‘proof of concept’ case study when engaging with prospective investors without creating a significant delay in the deal timeline.
