Commercial due diligence for a leading regional private equity player

The situation

The private equity arm of a large international bank wanted to acquire a stake in a company dealing in the tissues and diapers markets in the MENA region. The client retained Strategy& to conduct due diligence on the target acquisition.

How we helped

The Strategy& team assessed the market size and penetration rates in key geographies and determined five-year growth rates. They studied the consumption drivers of the target’s products and identified the market share, positioning, and competitive advantages of the target.

They determined the direct and operating costs of the target and compared the cost structure with benchmarks. They provided a detailed map of the target’s value chain, including estimates; reviewed the target’s business plan, challenging volume growth, pricing, and margin assumptions; and evaluated growth opportunities.

Results

The client adopted the team’s recommendations regarding growth assumptions, and closed the deal with the target. The due diligence was also used to inform potential investors.