PIP has extensive experience supporting private equity (PE) funds, listed companies and mid- to large-sized private companies with three core transaction-related services.
Commercial Due Diligence
We have extensive experience in this area having completed commercial due diligence (CDD) on over 70 companies. Our consultants have extensive expertise in mining equipment and services businesses, and in industrial B2B equipment and services businesses and in manufacturing sector. We also have extensive experience in healthcare services, transport and logistics, and fast-moving consumer goods (FMCG).
At PIP, our approach to CDD is to:
1. Take a hypothesis-driven, iterative approach in order to maintain focus and ensure an optimal use of time and resources.
- We focus on the key commercial questions/value drivers/issues/opportunities – and actively discuss and agree these with PE firms.
- We don’t work in isolation and hand over a report at the end of the engagement. We hold weekly (or more, as required) progress meetings to share key findings, analysis, insights, and to agree the next steps.
- We don’t crunch lots of data just because it is available – we only analyse data that relates to key value drivers/issues/opportunities.
- We review and agree our team priorities daily.
2. Utilise industry experts.
- At PIP, we don’t know everything and appreciate how valuable industry experts are – even for an hour a day.
- We use our extensive network of industry experts (inside and outside of PIP) to form and validate working hypotheses and to triangulate (sanity check) outcomes of analysis.
- We make a lot of phone calls.
3. Base our team at the client’s site or office, or within the target business, wherever possible.
- Interactions with client/target business management are invaluable for testing/refining hypotheses.
- We like to complete site tours to assess and quantify (80/20) improvement/growth opportunities.
4. Work hard to make a deal work – but we are candid when it doesn’t
- It’s easy to throw stones at an opportunity – harder to find a good angle.
- At PIP, we call a spade so our clients always know where we stand.
5. Prepare a balanced, practical report for investment committees and financiers. Expected outcomes can include:
- A comprehensive assessment of the target’s competitive positioning within a market with strategic insights into the likely long-term financial performance of the target.
- A confirmation of a target’s addressable market size and three- to five-year growth outlook.
- An assessment of key customer-purchasing criteria and how a target rates, compared to its key competitors.
- An assessment of customer segments, service levels and concentration.
- A clear summary of key risk factors and potential mitigation initiatives.
- A summary of quantified business improvement opportunities that may include gross margin, cost-out, throughput, capital or working capital improvement initiatives. PIP has extensive experience implementing these improvements on a pay-for-results basis – so you know our recommendations are bankable.
Turnaround and sell
PIP consultants have assisted a number of PE and listed company owners with turnaround and sell engagements, where we have focused on rapid performance improvement through the relentless focus on three or four key value drivers. We initiate and execute turnaround and sell engagements using the PIP Continuous Improvement toolkit, which involves four key steps:
- A complete business diagnostic to confirm key value drivers and to identify the three or four highest value ideas.
- The implementation of ideas with clear work plans that confirm what, who and by when.
- The implementation of PIP’s performance management system (wiring) from the business head down to the front line. This ensures clear accountabilities; Key Performance Indicators (KPIs) and weekly Results-Actions-Reviews (RARs) are in place.
- The driving of bottom-line results by working in the line with key front-line staff, Team Leaders, Supervisors, Managers and Executives.
PIP has assisted many clients with identifying, quantifying and implementing post-merger synergies in order to rapidly create value. For example, in the case of a large merger between two equipment rental companies in Australia, PIP successfully identified synergies in the closing of branches, realising back-office and inventory savings and reducing regional and head office functional overhead in finance, HR, IT, accounts, sales and marketing. We have extensive experience in realising revenue synergies, standardising business models, standardising commissions and many more activities.
Relative to our competitors, PIP's consultants have considerable experience in delivering change and bottom-line results. Unlike our competitors, our people have substantial implementation experience. We understand how organisations work and how proper incentive structures help to drive performance. The chart below shows the increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) for an operating company that PIP helped a Private Equity company turn around.
Our approach includes defining an ideas pipeline with the client team and driving the implementation of the highest value ideas, such as procurement optimisation, implementing yield improvement practices and increasing asset utilisation through improved planning. Lastly, we ensure strong alignment in the team through the implementation of wiring, which involves the putting in place of RARs from the top to the bottom of an organisation and defining clear, practical KPIs.
In my career, I have [witnessed] a lot of consulting work, but the work done by PIP is the best I have seen. It is practical and relates the results of the due diligence to the forecast outlook for the business. It raises key issues, which have been accepted by management. This means that the report will have a lifespan far beyond most consulting reports, which are fairly quickly destined for the bookshelf.