Identifying Risks and Opportunities through Pre-Close Commercial Diligence

Case Study

Mitigating Risk and Identifying 10% Growth Opportunities through Comprehensive Due Diligence

Challenge

A private equity firm was in the final stages of acquiring a $500 million industrial equipment distributor. While the financials appeared solid, the firm needed deeper insights into the company's sales, marketing, and customer service functions to identify any hidden risks or opportunities that could impact the success of the deal. They required a thorough commercial due diligence process to ensure an informed investment decision.

Approach

Revenue Blueprint conducted comprehensive pre-close commercial due diligence to assess the company’s commercial functions, identifying risks and potential growth opportunities:

  1. Sales Function Analysis: We performed a detailed review of the sales team's performance, pipeline management, and revenue generation, identifying both strengths and potential weaknesses, such as reliance on a small number of key accounts.

  2. Marketing Effectiveness Assessment: Our team evaluated the effectiveness of the company’s marketing strategies and channels, identifying underutilized opportunities in digital marketing and lead generation, which could drive future growth.

  3. Customer Service Review: We analyzed the customer service processes, uncovering potential risks related to service bottlenecks and customer retention, particularly in underserved segments that could impact long-term profitability.

  4. Risk & Opportunity Mapping: Based on our findings, we provided a clear roadmap of the key risks and opportunities within the commercial functions, offering actionable insights for post-close improvements.

Impact

  • Risk Mitigation: Our due diligence uncovered several risks related to customer concentration and operational inefficiencies, allowing the client to negotiate more favorable terms and plan for targeted improvements post-close.

  • Identified Growth Opportunities: We identified opportunities in underutilized marketing channels and customer service improvements that could drive an additional 10% revenue growth within two years.

  • Informed Investment Decision: The detailed analysis enabled the private equity firm to make a well-informed investment decision, ensuring that they had a comprehensive understanding of the company’s commercial strengths and weaknesses before closing.

Conclusion

Revenue Blueprint’s pre-close commercial diligence provided the client with critical insights into the target company’s sales, marketing, and customer service functions, helping mitigate risks and identify growth opportunities. This ensured a more secure and profitable investment outcome.