Case Study
Identifying Distressed Entities for a Restructuring Advisory Firm
Target Identification| Investment Opportunity Assessment | Sales Enablement
Business Need
- A European advisory firm wanted to increase its sales by proactively identifying healthcare sector entities requiring restructuring services.
- It sought to understand and create a list of these distressed firms in the healthcare sector, focusing on US, Canadian and European geographies.
- To achieve this, the firm engaged RocSearch to assist it in identifying the distressed firms in the target geographies.
To identify and create a list of distressed healthcare firms in the US, Canadian and European regions.
The client outlined two key reasons for selecting RocSearch:
- Our ability to deploy an experienced and highly pedigreed investment research and advisory team.
- Our proven track record in identifying financial distress through advanced financial analysis tools and methodologies.
Approach and Methodology
- Our investment research and advisory team followed its proprietary RocEye DistressedTM risk assessment approach, leveraging paid databases and other sources to prepare a consolidated list of target firms. Further, we performed a financial analysis based on parameters such as EBIT margin, EBITDA, interest coverage ratio, Return on Equity, total debt/equity and quick ratio to shortlist the firms.
We executed a comprehensive sales enablement initiative, screening over 1,600 firms and identifying 128 distressed entities through rigorous qualitative and quantitative analysis.
- We Leveraged databases, such as Bloomberg and CapitalIQ, to extract a list of 1,600+ companies in the target sector and region, along with the companies’ financial details.
- RocSearch analysed shortlisted companies based on 17 financial parameters such as EBIT margin, EBITDA/Cash Flow(CFO), stock price/CFO, interest coverage ratio, ROE, total debt/equity, quick ratio and cash conversion cycle.
- We triangulated financial analysis with qualitative news triggers (lay-offs, liquidity crunch, debt restructuring, etc.) to perform forward-looking analysis and shortlisted the distressed firms.
Business Outcomes
- The study provided a list of ~128 highly or moderately stressed firms, enabling the client to create a sales pipeline of EUR 200 mn+.
- The client saved 1,000+ analyst hours in target identification, and there was a 25% increase in its visibility of distressed companies as potential sales targets.
The client created a sales pipeline of more than EUR 200 mn and increased the distressed firms’ visibility by 25%.
