Pre-LOI Market Diligence Case Study

The problem: A lower-middle market private equity group faced a dilemma. The bankers running a sale process were triple-tracking bidders and gave them all a very tight window in which to respond with a bid. The sellers were asserting that a market shift – a migration of customers from one segment to another -- was benefitting it dramatically. Unfortunately, the niche nature of this market meant that there was no public, published evidence that this transfer was taking place. To complicate matters, the sellers were unwilling to provide customer or prospect lists.

The solution: Acclaro had only four business days to complete the assignment, so we got creative. We decided to focus only on competitor conversations. And we distilled the project down to three core research objectives:

  1. Is the transfer occurring?
  2. Why?
  3. How much runway remains?

The result: In a very clear, simple and useful report, we provided the analysis, backed up by plenty of quotes and raw data, to show the client that the migration had been occurring for years, was nothing new, and the runway of remaining conversions was quite limited. As a result, our very limited scope assignment saved the client from investing tens of millions in a business already on a downward growth slope.

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