Clients choose JBR, among others, because of the added value and synergies between our Strategy and Corporate Finance disciplines. Consultants from both disciplines regularly work together on projects at the intersection of their disciplines. This experience comes in handy when a client's question leads to a Strategy process that is followed by a Corporate Finance process (such as an acquisition or sale) or vice versa. Our Strategy Advisors know which criteria are relevant in a Corporate Finance process and take them into account in their analyses.
Recently, for example, we were approached by a Family Office. They had formulated a guiding framework for a buy-and-build strategy and were looking for support in determining the market segment on which the investment choice should focus. For this question we developed a framework with which we, in three phases with relevant criteria and discussions in several workshops, reduced a large number of options to a select group of most interesting strategic options.
You can read a reference of this case on our website.
Points of attention/experience
- In this assignment, the combination of Strategy and Corporate Finance knowledge was essential to approach the problem definition in a buy-and-build analysis. This includes considerations such as: which market segments are extremely interesting to invest in versus in which market segments acquisitions are possible at an attractive price and synergies can be realised through buy-and-build.
- Clear and well-aligned definitions of choice criteria and market segments are crucial to avoid errors in the analysis.
- Depending on the information requirements and definition of the selection field, a bottom-up or top-down approach must be chosen. Decisive here is how broadly the search is formulated, what the scope of available data (sources) is and the quality and completeness of the data.
- High quality public or commercial databases exist for most searches. These can be used to supplement the data a client has collected.
- Sanity checks and validating and improving data remain important. The insights and sector knowledge of client and consultant can complement each other well, thus saving time.
- Don't boil the ocean: By applying filters in different rounds, work can be minimized efficiently. Not interesting market segments can be filtered out early on by defining disqualifying criteria. The most interesting market segments can be examined later on by means of extensive analyses of distinguishing criteria.
- Discussions with market experts have a lot of value; as a source of information and inspiration, but also for the validation and interpretation of data.
- While continuity and history are valuable, they should not be limiting. Analyzing major trends can lead to defining opportunities in new directions.
Where might the approach be applicable?
JBR is approached by different types of organizations for support in building portfolios. There are Family Offices, for example, that want to set up a new division, Private Equity that want to introduce a new buy-and-build platform or companies that want to set up a new business unit. The same approach is also applicable for other investment choices from different options, when a divestment choice is needed to make a portfolio leaner and more future-proof, for a commercial Due Dilligence or to substantiate a business case.
Are you interested in sparring about issues where our approach might be applicable? Please do not hesitate to contact us.
Kees van Biert
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