ABI ADVISES AN INDUSTRIAL COMPANY ON ACQUISITION STRATEGIES

THE CLIENT

An Indian SME in the manufacturing space was looking to evaluate its growth options and hired ABI to critically evaluate available options to support growth. ABI worked closely with the corporate strategy team of the client through the completion of strategic growth initiative.

SCOPE OF WORK

The client needed in-depth analysis of strategic options available to it. The specific scope of the work included:

  • “As-Is” business evaluation on standalone business growth potential
  • Opportunity assessment and future growth scenarios
  • Strategic-gap analysis to exploit emerging growth opportunities in the sector/markets
  • Evaluating acquisitions as a bolt-on growth option
  • Identifying, shortlisting and conducting strategic-fitment and potential synergies for any acquisition
  • “To-Be” business valuation based on potential value of synergy from the combined operations
  • Sensitivity of business valuation with changes in key business drivers and macro/industry scenarios

ABI SOLUTION

  • ABI deployed a multi-disciplinary team comprising:
    • A sector expert to guide the team on assessing the market attractiveness, competitive dynamics and sources of competitive advantages. The sector expert also guided the team on potential competitive landscape and resultant business growth scenarios for the client’s portfolio company
      • Organically build the capability versus acquiring now
      • The scenario where another competitor acquires the target company
    • An expert on financial analysis & business valuation to create the financial model incorporating all relevant business drivers
    • An expert on technology to guide the team on existing and evolving technologies in the domain and their commercialization potential.
    • A transaction advisor to guide the client’s team on negotiations and/or negotiate on their behalf
  • The work was carried out in Four Phases:
    • PHASE 1: Strategic Growth Options Analysis
      • Market Opportunity Assessment
      • Competitive Landscape Analysis
      • Strategic Gap Analysis – Products / Services / Technology / Markets
    • PHASE 2: Defining The Acquisition Strategy
      • Build Vs Acquire
      • Risks Vs Rewards
      • Potential Targets Shortlisting
    • PHASE 3: Valuation & Transaction
      • Initiating Talk With Targets
      • Fitment & Synergy Analysis
      • Due Diligence
      • Financial Modelling
    • PHASE 4: Concluding The Deal
      • M&A Transactions Structuring
      • Evaluating Funding Options
      • Negotiations
  • ABI team validated the historical financial statements and forecasted projections of the target company based on the company’s current growth, strategic plans and external business environment. ABI team also evaluated the target company’s sales forecasts and market share estimation based on the competitive dynamics, technological landscape and manufacturing capabilities
  • ABI analysts created an in-depth valuation model incorporating sources of value creation and synergies. Valuation with scenario analysis was also based on rigorous benchmarking
  • ABI team helped negotiate optimal consideration price based on prevalent market conditions and potential acquisition benefits

ENGAGEMENT BENEFITS

  • A comprehensive review of the strategic growth options helped the client realign its business plan for next five years
  • Time-efficient strategic move as multiple teams were able to work on different aspects of the deals
  • Continuous communication and discussion on interim deliverable meant that the entire deal team was aligned with the same objectives
  • Financial model – with its value allocation analysis among stakeholders under different scenarios – worked as a key negotiation tool for the client’s team negotiating with the target company
  • ABI also delivered M&A rationale report and presentation slides for the consideration of the board members of companies
  • Focus on data-security and well-defined access structure on the “need-to-know” basis keeps the data and information security as the same level as is found in the internal team
2018-03-29T22:26:25+00:00