The private equity investor owned a growing IoT service provider in high demand. The investor wished to ensure maximum returns for both its investment and for the management team, knowing it was in a ‘hard-to- understand’ and high-growth telecoms/tech segment where approaches to reviewing markets, financial performance and valuation varied significantly. There were also strategic/trade partners and financial sponsors who were likely interested in the asset, each with a different level of understanding.
The private equity firm and IoT service provider management team therefore sought strategic thinking, industry insight, challenge and M&A support as a commercial vendor diligence package. They valued the GSG practitioners’ leading experience in developing growth strategies for industry players and their deep understanding of fast-changing, tech-enabled industry disruptors and emerging business models. The GSG team’s past experience in providing commercial diligence to support successful PE exits also demonstrated an ability to work with management teams, investors and other advisors to de-risk the M&A process.
The GSG team articulated the complex, changing market structures, assessed growth drivers and emerging profit pools, and calibrated key features of the target’s business and operating model: product features and service, indirect sales channels, platform IT, and financial model that highlighted the attractiveness of unit economics. GSG’s review of management’s plan identified further value from accelerating growth in new product and geographic profit pools, from both organic and inorganic strategies.
GSG’s strategic advice in evidencing value defensibility and upsides led to the IoT service provider successfully transacting to a financial sponsor at market-leading valuation multiples.
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