Due diligence for a €500m secondary buyout
The Problem: Need for due diligence and support throughout multi-stage auction process
In a heavily competed recent process around a c.€500m secondary buy-out, our client (a direct investment arm of a leading international pension fund) needed flexible support before and during a multi-stage auction to establish initial credibility, understand opportunities for outperformance and rigorously test the robustness of aggressive revenue projections.
Vendor-commissioned diligence was extensive but lacked rigour and credibility. As such, and with limited access to the business on the basis that due diligence 'had already been completed', our client needed to get ahead of the pack in its understanding and get a true sense of what projections were genuinely deliverable.
Our Approach: Market review and historic customer analysis informing a value-creation strategy
While competitor funds looked for complex M&A driven angles, we used our deep knowledge of the target markets to steer our client through the issues to understand the key, important themes and to drive a value-creation strategy.
In addition to the relatively standard commercial due diligence areas around macro and specific market and competitive factors, we carried out extensive M&A/buy-and-build analysis, reviewed cost-out opportunities and carried out a detailed, historic, customer-by-customer analysis of historic performance. The last of these in particular was deemed impossible by the sell-side adviser but proved crucial to our client's investment thesis.
The Result: Successful completion within tight timeframe
Our client won the auction and successfully acquired the business in an extremely tight (days not weeks) period of exclusivity.
Offers to provide debt on the deal were significantly oversubscribed at terms acceptable to our client.