Review of investment memo | Pre-M&A due diligence | Benchmarking against peers

Business need

  • As part of its inorganic growth plan, a German automotive-component manufacturer was evaluating an auto company for potential acquisition.
  • The target company was a manufacturer of automotive connectors, cable assemblies and Electronic Control Unit (ECU) components.
  • The client wanted to get a deeper understanding of the target’s end markets and assess opportunities, with a focus on Europe and North America.
  • It also wanted an in-depth analysis on the performance of the target company and a review of its key performance indicators.

To understand market opportunities and evaluate the target company for acquisition.

The client outlined two key reasons for selecting RocSearch:

  • Our proven investment advisory and pre-M&A due diligence capabilities.
  • Our flexible client-centric engagement models.

Approach and Methodology

  • Our strategic research team examined the market and tracked the technological and regulatory developments and their implications for the automotive connection equipment market.
  • We assessed the industry’s growth outlook across the target’s end-markets (comprising specific passenger & commercial vehicle models, in addition to defence & agriculture vehicles) and product categories (comprising connectors, cables, cable assemblies & ECUs).

We closely reviewed the target company’s investment memo, benchmarked it against its peers and assessed the uniqueness of its growth strategy, in addition to carrying out a relative valuation of comparable companies.

  • We conducted interviews with experts to gather insights on the target’s headwinds and tailwinds, key success factors, pricing pressures and contracting terms.
  • We also gathered insights on the target’s strategy to gain market share and barriers for its competitors to replicate its strategy.

Business Outcomes

  • Validation of the clients’ key questions related to the target company’s end markets, competition and strategy.
  • Fact-based insights derived from the competitive benchmarking exercise and comparable analysis.
  • Based on our detailed review of the target company and its peers, the client decided to reconsider the deal decision.

Based on our detailed review of the target company and its peers, the client decided to reconsider its deal decision.

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