industry
Private Equity
Deal Evaluation for a Private Equity Firm
Client Problem
- What bid price will win the acquisition of a branded consumer and professional products company and what strategies will generate a significant upside return on investment post-acquisition?
- Valuation complicated by recent shift in distribution focus from specialty stores to mass merchandisers
Project Objectives
- Determine the valuation necessary to win the deal
- Competitive bidders' strategies and perspective on the business
- Risk adjusted return evaluation
- Identify and develop strategies to meet newly emerging competitive threats and evolving customer requirements
- Identify and evaluate strategies and specific initiatives to capture upside and enhance deal returns
Approach
- Evaluate company's current situation and business plan to determine the sustainability of current growth and profitability trends
- Research and quantify the impact of emerging threats to current business performance (competitors or imports, substitutable products, new distribution channels including the Internet)
- Evaluate areas where the company has demonstrated competitive advantage and assess the opportunity to more fully leverage that advantage or extend it into new areas
- Brand recognition and extendability into new market areas (for example, other product categories or international expansion)
- Core competencies and extension into new products within the company's existing product categories
- Best practives and the opportunity to extend the leverage and reach of the most effective practices more broadly within the organization (for example, sales practices leading to the highest local market penetration)
Results
- Business successfully acquired
- Previous owners negotiated retaining a minority position to participate in identified business upside opportunities
- Ongoing involvement by Dean & Company in strategic initiative development through board seat and leveraging of our contacts in the retail industry
