Engagement: Buy-side market advisory and target receptivity

Description of industry/product segment: Leading global manufacturer low voltage electrical components

Situation: M&A, joint-venture versus partnership. The ways in which an American companies can enter either the Western, Eastern or Central European markets are many. Unfortunately, the specific challenges facing the company are considerable, associated risks and pitfalls even greater.  Few decision-makers today can afford to rely on intuition or opinion, even when based on years of experience with these markets.  Furthermore analysis of secondary information on its own falls short particularly in industrial markets.  This is even more the case in Europe, where national, cultural and linguistic barriers oftentimes blur facts and prohibit the development of a consistent and truly pan-European analysis. The inherent importance of gaining up-to-date, comprehensive and objective information becomes apparent and the quality of the research partner key.Take a recent project completed by Ducker Research Europe as a case study here.  Our client, a leading manufacturer of electrical power and protection components with significant share in North America but only a marginal presence beyond,  asked us to evaluate and identify suitable European target company for acquisition and (in the likelihood that this was not possible) partnership. 

Approach: Having being briefed on the necessary characteristics of such a “would-be ideal” candidate i.e. turnover, manufacturing capabilities and geographic presence etc, Ducker Research Europe proposed a methodology based on primary research in three main European markets.  Through our unique ‘Target Identification’ and based over two-hundred in-depth face-to-face and telephone interviews we screened approximately one hundred “possibles” down to the four most suitable for acquisition.  Once this short-list was made, we then embarked on our ‘Target Receptivity’ to gauge each targets openness to enter into dialogue and eventually negotiation with our client, they buyer.

Analysis was completed at several levels and included firstly calculation of the overall market size and value for such electrical components.  In this context, we estimated each of our targets’ relative market share per product and market.  At the same time, by means of interviewing leading market actors, we developed key insights as to their brand equity and perceived strengths and weaknesses vis-à-vis other competitors, suppliers, and end-user groups.  Financial reports along with details as to their product range and production capabilities were developed.  The final stage involved of the process, where relying on a NDA signed between the Target Company and Ducker, we interviewed individual senior members of each companies BOD as well as their lawyers and accounts to evaluate their likely interest in both acquisition and partnerships.

Outcomes: Research was conducted in an autonomous and confidential manner whereby our client’s name and strategic intention was safeguarded.  Conducting this study allowed our client to access up-to-date unbiased and highly confidential information about the European market and the most suitable acquisition candidates.  We accompanied our client on this buy-side transaction to the signature of a LOI with the target company. Follow the European offices involvement in this transaction advisory, our client acquired in a non-action based manner a UK based low-voltage manufacture with a revenue of approx. £300,000.