The client was trying to determine the appropriate bid price to win the acquisition of a branded consumer and professional products company and what strategies would generate significant upside return on the investment post-acquisition. Valuation of the target was complicated by a recent shift in its distribution focus from specialty stores to mass merchandisers.
Our primary objective was to determine the bid necessary to win the deal and a risk adjusted return evaluation. This required a focus on both the target’s core business and competitor bidders’ strategies. Our analysis identified and developed strategies for the business to meet emerging threats in its markets and evolving customer requirements. Additionally, we focused on strategies and specific initiatives to enhance deal returns and capture upside.
Our approach examined the target’s current situation and business plan to determine the sustainability of current growth and profitability trends as well as evaluating areas where the company had demonstrated competitive advantage and assess the opportunity to more fully leverage or extend it. We researched and quantified the impact of emerging threats to the current business performance (competitors or imports, substitutable products, new distribution channels). Additionally, we estimated the value of the target’s brand and its extendability into new market areas (for example, other product categories or international expansion). We also quantified the impact of extension into new products and the leveraging of best practices across the business (for example, sales practices leading to the highest local market penetration).
The target was successfully acquired with previous owners retaining a minority position to participate in identified business upside opportunities. Additionally, there has been ongoing involvement by Dean & Company in strategic development through a board seat and leveraging of our contacts in the retail industry.