Case Study 1: Market Due Diligence and Growth Strategy Validation
Case Study 2: Due Diligence For Potential Acquisition in the Technology Market
Case Study 3: Targeting Current and Potential Clients More Effectively

Challenge: A leading global private equity house is looking to sell majority stake in a manufacturing company. The value of the stake is based on the manufacturer’s assertion that it can grow sales at 4x market rate. Bidders are skeptical.

Work carried out to date: A leading management consulting firm was hired in early 2004 to provide support to the manufacturer’s growth forecasts. The project focused on an internal competency review based on interviews with managers and staff. The results did not satisfy the bidders. The report gave no indication from the market that the company’s plans were feasible.

Frost & Sullivan Approach: The private equity house was familiar with our research activities and hired us to perform a market-based assessment of the manufacturer’s strategy.

The project needed to satisfy the bidders, so a face-to-face project scoping session was carried out between Frost & Sullivan, the manufacturer’s senior management, and financiers from both the sell-side and the buy-side.

Core Requirements: In order to make an informed investment decision, the buy-side parties needed Frost & Sullivan to answer the following three questions:

 1) Is the company in the fast-growing segments of the market?
 2) Is the company expected to retain market share?
 3) Is the company expected to maintain its premium price positioning?

Methodology:  Frost & Sullivan assigned a team of six specialist analysts to cover the main geographic markets around the world.  The research comprised:

 1)  Review of our in-house data sources and public domain information
 2)  Detailed discussion with company’s management team to fully examine factors underpinning 10-point growth strategy plan
 3)  45 supply side interviews and analysis with competitors
 4)  100 demand-side interviews and analysis with current, lapsed, and potential customers


Results: The assignment was completed within one month of the kick-off meeting.

 All key questions were answered:

 - The research focused on the niche market segments where the company was strong.  Growth rates here were higher than total market average
 - The company has a largely satisfied and loyal customer base
 - The company has a unique and highly specialized offering, which is difficult for competitors to replicate
 - Customers are prepared to pay the company’s premium prices

The above issues were largely intended as “downside protection.”  As an upside, Frost & Sullivan’s analysis of the business plan showed that the company’s market-beating forecasts were conservative.

A Positive Outcome: The private equity house was able to successfully sell its stake.
Frost & Sullivan is now working with the buying parties to secure a broader level of investment funding.

Challenge: A private investment firm was looking to conduct due diligence in support of the potential acquisition of a certain software company. The firm approached Frost & Sullivan to address its need.

The Process: To meet this challenge, base-case and potential revenue scenarios were developed, and the potential target's current product offering was thoroughly examined. In addition, the software company was analyzed to determine if it was adequately positioned to take advantage of the industry trend toward Digital Asset Management. The team also evaluated the implications for growth in the target's top-line over the next three to five years.

Research Measurements:

The project addressed the following key questions and research objectives:

1. What is the structure of the current U.S. workflow management software market with the
    media and communications industry?

a. What are the relevant industry economics and value chain considerations?

b. The market was initially segmented into the following vertical markets:

1. Small market broadcasters
2. Large market broadcasters
3. Cable MSOs
4. Cable Networks
5. Advertising agencies
6. Direct Broadcast Satellite (DBS) operators
7. Digital Asset Management (DAM)

c. The following questions were addressed for each of the above verticals:

1. What is the market size (2003)?
2. What is the forecast growth rate in the U.S. (2004E-2008E)?
3. Who are the main competitors, and what are their respective market shares?
4. What is the current relative competitive positioning?

d. What are the relative growth trends and DAM potential with prospective customers in Europe,
    Asia, and other regions?

2. What is the competitive position of the company and its product portfolio?

• Product and service SWOT analysis
• Competitive product profiles
• Customer perceptions, product perception, and purchasing history by leading customers
• Pricing trends and the company's offering

Results: Based on the results of the research, the private investment company was better equipped to determine if the potential acquisition would result in long-term benefits for the companies involved.

Case Study 3: Targeting Current and Potential Clients More Effectively

Challenge: A business services firm was looking to understand the drivers of the core measurements of satisfaction, acquisition, retention, and market and account share in order to communicate its services to current and potential clients in the most effective way possible.

The Process: To address this challenge, four main market segments were established, including food, metal fabrication, printing & publishing, and transportation equipment. In addition, the team compiled a qualitative descriptive survey and gathered the information via primary interviews. The survey audience included presidents, CEOs, CFOs, COOs, CIOs, executive directors, VP operations, production managers, and manufacturing engineers. Additionally, the surveys covered 15 geographic markets defined by the client, with proportional representation from each market.

Research Measurements:

Survey questions were designed to assess the following topics:

1. Company financial and business consulting services needs, impact on operations, and need
    for outside services

2. Growth projections for business consulting and financial services needs

3. Professional services skills required

4. Details on the specific products and services currently used, and those desired for the future
    (i.e., audit, tax, IT, HR services)

5. Industry issues and considerations

6. Level of concern for:

• Regulatory issues
• Deregulatory issues
• Governance issues

7. Current provider audit

8. Company information sources

Results: Based on the results of the research, the business consulting firm was able to more effectively target current and potential customers to expand its business and maximize revenues.

BUSINESS AND FINANCIAL SERVICES DELIVERABLES

Financial Benchmarking & Analysis			Consulting Capabilities