Challenge

A private equity (PE) firm seeking to expand its portfolio through strategic acquisitions in a highly specialised niche market approached us for support. They required an independent analysis of several target businesses to determine their strategic fit, financial viability, and integration potential. The firm had been introduced to us by one of their Non-Executive Directors, who recognised the need for an objective and industry-expert-driven assessment to inform their decision-making process.

Solution

Leveraging our extensive network, we identified a seasoned industry expert who had previously led the largest company in this niche and possessed extensive M&A experience. Over an intensive three-week engagement, we conducted a deep-dive analysis into the target businesses, incorporating both publicly available information and insights from key industry connections.

Our approach included:

• Market Positioning Analysis: Assessing the target companies’ competitive advantages and market presence.
• Operational Synergy Evaluation: Examining how these businesses would integrate with the PE firm’s existing operations.
• Financial Review: Analysing the acquisition costs relative to potential value creation.
• Independent Industry Perspectives: Incorporating real-world insights from experienced professionals within our network.

The findings were compiled into a comprehensive due diligence report, presenting an unbiased and detailed evaluation of the opportunities, potential integration costs, and strategic alignment with the PE firm’s objectives.

Outcome

The report provided the PE firm with a clear, independent perspective on the acquisition targets. While the businesses were found to be strategically aligned and operationally strong, our analysis highlighted that the expected acquisition costs exceeded their actual value. This led to a revised bid strategy, significantly lowering the offer price to align with the firm’s return expectations.

Ultimately, the bid did not proceed, as an external party entered the process with an offer significantly above market value. However, our due diligence enabled the PE firm to make an informed, data-driven decision, ensuring they did not overpay for an acquisition that did not meet their financial thresholds.

Key Takeaways

• Independent analysis provides objective decision-making insights: Utilising an industry expert ensured a credible and strategic assessment.
• Network-driven intelligence enhances due diligence: Access to real-world perspectives offered a deeper understanding beyond financial metrics.
• Disciplined valuation protects against overpaying: The PE firm avoided an overvalued acquisition and maintained financial discipline.

This case study highlights the value of independent, expert-driven due diligence in ensuring that acquisition decisions are based on strategic fit and financial prudence, ultimately safeguarding investor capital and long-term growth objectives.