We help investors make better deal decisions by performing due diligence, assessing performance improvement opportunities and providing a post-acquisition agenda.
Our experience allows us to help clients quickly develop an accurate assessment of key industry performance issues, including cash flow drivers, relevant market and customer benchmarks and exit options. In addition to external assessment, as timing and protocol allow, we also conduct a thorough internal one, interviewing the target company’s management, as well as reviewing its customer base, personnel and operations.
LAM TRAN PARTNERS can support all stages of this process, including presentation of letters of intent, provision of objective, third-party business analysis to enable financing.
We help ensure that investors consummate deals with a maximum return by preparing for exits, identifying the optimal exit strategy, preparing the selling documents and pre-qualifying buyers.
LAM TRAN PARTNERS helps clients achieve maximum returns from their exits through a four-step process:
- Positioning for performance, by screening the most attractive growth opportunities and set the company on a path to achieve them.
- Evaluating the suitable exit approach, whether it is an initial public offering, a merger with a strategic acquirer, a sale to new private equity owners or a management-led leveraged buyout. We evaluate the industry trends, business cycle timing and equity market conditions relevant to the firm.
- Preparing the selling documents, to facilitate due diligence by prospective buyers or support the competitive and financial analysis required in a prospectus for a public or private listing.
- Pre-qualifying buyers and customizing the sales approach, which identifies potential acquirers and, through a “reverse due diligence” process, anticipates their needs, concerns and capabilities and how best to address them.
Performance Improvement Diagnosis
Our approach with the performance Improvement Diagnosis come from the practice of many of the best consultant in the industry. It provides an understanding of the four fundamental laws of business–and the gathering of essential related facts needed to create an effective diagnosis of the business. The laws and related questions are these:
Costs and prices always go down.
- How does your cost experience slope compare with your competition?
- What is the slope of price changes in the industry?
- Which of your products or services are profitable (or not), and why?
Competitive position determines your options.
- What is your relative market share? What is the size of your market and how fast is it growing?
- Is your profitability in line with your relative market share? Which capabilities reinforce your competitive advantages? What capabilities are you lagging on?
Customers and profit pools don’t stand still.
- Which are the biggest, fastest-growing and most profitable customer segments?
- What is your customer retention by key segment?
- What is your share of the competitive profit pools? How is that changing?
Simplicity gets results.
- How complex are your business lines, products, organization and business processes, and what are the costs?
Successful companies not only invest, they divest too. When they think about how best to manage their portfolios, they think simultaneously about which businesses to grow and which to shed. Looking beyond the stigma associated with divesting businesses, they see its clear benefits:
- Divesting non-core assets permits management to focus its attention on its core business and not its problem children.
- The perceived risks of earnings dilution and cash flow are generally less than the actual risk. Our case history is chock-full of examples of companies that have divested assets and seen significant rises in their stock price post-divesture.
- The decision to restructure the portfolio creates a good opportunity to reshape the company’s message to investors, employees and other interested stakeholders. A divestiture can act as a catalytic event, prompting management to take action that it has long known it should take.
Our approach to divestiture typically includes three phases:
- Articulate growth aspirations
- Choose where to invest and where to divest
- Evaluate if you can separate the business to be divested, and draw up a separation plan
- Assess divestiture options (outright sale, spin-off, equity carve-out)
- Build the exit story (a compelling rationale for buyers)
- Create the road map to full potential (how the business will realize its full value)
- Design in detail the separation
- Set financial targets
- Harvest low-hanging fruit
- Value business to be divested and set walk-away price
- Screen buyers based on the business’s value to them
- Conduct reverse due diligence and devise a buyer approach