A private equity firm needed to complete market and customer due diligence before buying an eCommerce solution provider. Partnering with Waterstone, they conducted a rapid analysis to develop a perspective around customer satisfaction, market trends, and growth opportunities.

The Issue

A mid-market private equity firm with $2B under management was considering the acquisition of an eCommerce solution provider to software developers. As part of their due diligence, the PE firm wanted to get a customer perspective to confirm identified value drivers, confirm market
trends and risks to the business, and prioritize growth opportunities. 

The Approach

Waterstone worked with the PE firm and the management team of the target to address these key questions in a compressed time schedule of under four weeks. The diligence effort was focused on three key areas. First, Waterstone conducted a customer insight analysis to validate management claims of high customer satisfaction, and to gain insight into sales volumes, product usage, and related trends. To develop a perspective around the customer base, we surveyed 1,500 customers, interviewed select groups of customers, including several of the largest accounts, and analyzed the customers' revenue distribution. 

The second area of insight was a detailed study of competitive and market dynamics. For the third area, we leveraged the customer insights and the market analysis to evaluate a set of growth opportunities and to prioritize them using a framework that measured the revenue opportunity and risk associated with each growth opportunity. Finally, Waterstone proposed a timeline for executing the proposed growth opportunities, and outlined the key operational requirements for each.

The Results

The PE client was able to validate the management team's claims and outline high-priority growth opportunities. The private equity firm incorporated Waterstone's findings into their investment committee presentation and go/no-go recommendation to acquire the target.