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| Equipment parts manufacturer |
Context / Scope of project
Our client was an Australasian investment manager looking into acquiring a significant stake in a listed Australian based manufacturing company, where an opportunistic investment was possible due to the softened share market in 2009. PIP was engaged to undertake commercial due diligence on the operation and macro-environment to support the investment thesis.
Key Insights:
- Presented likely scenarios for costs of production, market share and other key business drivers
- Forecast cash flow for numerous scenarios over a two year period to assess management and investor hypothesis of a quick return to profitability
- A number of operational recommendations based on analysis and PIP experience in the industry
- Assessment of operations to achieve cost targets and major risks to improving performance (staffing, distribution channels etc.).
Outcome:
- The client was satisfied, based on the work completed within 2 weeks, that the investment hypothesis was robust and was a significant opportunity for value creation
- The value of the investment has increased over 40% in an 18 month period, with significant upside still possible.
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What we did:
- Developed a detailed, hypothesis driven report for the client that worked in conjunction with their investment thesis
- Undertook a detailed review of the company’s major markets, specifically analysing
- Historical market dynamics and performance
- Future market demand
- Competitors (SWOT analysis)
- Market pricing and positioning
- Market share
- Developed a detailed driver tree that allowed PIP and the client to model a range of scenarios for key cost and market assumptions / sensitivities.
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