GRAPH Papers® Commercial Diligence Best Practices

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Mark Stein

Author: Mark Stein
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015

Uncovering a Platform Play

By Mark Stein

The common case: The target asset (i.e., the target company) has a demonstrated track record of running a good business, enjoys healthy margins and some nice growth. The research indicates that drivers of demand are strong and sustainable. But the diligence also surfaces the fact that none of the providers, including the target company, have a materially differentiated solution – and the market…
013

Fruit that’s Ripe for Non-traditional Disruption (and how to diligence the prospect of it)

By Mark Stein

The Amazon Whole Foods tie-up is certainly throwing more than a couple of mature industries for a loop: food production, logistics and distribution, mass-retail and groceries. Since the announcement (and as of today), Costco lost 17% of its value; Kroger is down 30%; Sprouts is down 24%; Wal-Mart took a hit but seems to be holding its own.
011

Indefensible (Competitive Position)

By Mark Stein

I’m fairly certain that just about every commercial diligence assignment conducted is going to include measurement of the asset's commercial strength relative to customer needs and expectations, and relative to perceptions of competitors and alternatives.
009

Strength of Demand vs. Strength of Brand

By Mark Stein

What is more important when looking at a deal: the strength of demand drivers, or the strength of the target company's brand equity? With rare exception, Demand – not Choice (brand equity among suppliers) – is more fundamental to a successful acquisition outcome.
007

When Things Aren’t Quite What They Seem - Distressing Commercial Due Diligence Close-Calls

By Mark Stein

Often, we encounter situations in Commercial Due Diligence that may be surprising to our clients, some may even seem negative. With a thoughtful approach, the information can contribute to the Value Gen plan. Here we share a few scenarios we've encoutered.
006

A Quick Follow-up on Market Definitions

By Mark Stein

In one of our earlier GRAPH Papers® articles, my partner James referenced how important it is to accurately define the market when it comes to market sizing requirements. Per that GRAPH Paper, “Having clear definitions that everyone on the deal team is aligned on is essential.” Beyond supporting market sizing, being clear on the market definition helps the team better understand the target…
005

Sizing Up Bad Market Definitions

By Mark Stein

Reflecting on 20 years of investing, one investment professional recently remarked to us, “When I think about what we’ve gotten wrong in the past, the worst times have been when we believed we had a bigger market size than we really did. There’s just nothing you can do...the company just runs out of room for growth.”
004

Assessing the Threat of Low Cost Imports

By Mark Stein

Anyone who has worked deals in the industrial engineered products and components markets in the last decade likely encountered a common diligence issue…
002

Problems to Avoid when Forecasting Product, Service, and Technology Adoption as Part of Diligence

By Mark Stein

An investment thesis often depends on adoption in one form or another (e.g., of a new product, business model, technology, etc.) so we thought it helpful to lay out “best and worst” practices for assessing adoption potential.
001

In Diligence, Competition Between Competing Budget Priorities can be more Important than Competitive Position

By Mark Stein

Many deals are attractive because the target company can turn heads and get customers excited about new technology and an enhanced value proposition.

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