Tailormade commercial due diligence
A private equity company had an exclusive investment opportunity at hand. To get a grip of the market they needed to understand market development and the performance of the target company. In a thorough commercial due diligence (CDD) process we were able to shed light on these questions and in the end the PE company decided to make the investment.
Challenge
A private equity company had got its hands on an exclusive opportunity that showed huge promise. But its deal team had some suspicions regarding market fundamentals. The team wondered if the solution that the target offered was as powerful as it seemed. Similar suspicions arose whether market fundamentals were really as favorable as the target had described. A key question for the deal team was if the target, with its unique positioning and approach, could truly be the winner in its market. To shed light on these questions, the deal team enlisted August’s support.
Brave the future
August’s CDD team, in close collaboration with the deal team, made a thorough assessment of the market and value chain where the target operated. We assessed both historical and expected demand for the target’s services in all Nordic countries. With the deal team’s guidance, we analyzed potential risks stemming from technology as this was an integral part of the target’s offering. To evaluate if the target could be the winner in the market, we made a comprehensive analysis in the value chain to understand direct and indirect competition. These analyses shed light on the target’s true potential.
The impact
The thorough assessment of the markets and competitive landscape were able to find the much needed answers. We were able to confirm (or shoot down) the myths that had baffled the investment team in the beginning. In the end the PE firm decided to go forward with their investment and acquired a majority of target’s shares. The target’s management had been part of the CDD process and after the investment, were able to hit the ground running with the business planning process.