GRAPH Papers® Commercial Diligence Best Practices

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Drivers of Choice

GRAPH defines Drivers of Choice, sometimes referenced as the key purchasing criteria, as the factors that customers will evaluate when selecting a product, service, or partner. This includes portfolio breadth, value for price, customer service strength, technical support strength, reputation, among others in our 13-point model. Moreover, our recommended approach critically distinguishes table stakes from differentiators (noting that while a factor can be “important” it will have a very different implication if its serves as an important table stake versus an important differentiator).

Here, we group a selection of GRAPH Papers®️ articles that discuss Drivers of Choice best practices and suggestions in the context of assessing what matters most to decision, and how a given company performs relative to competition on the factors that matter most.

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Topic: Drivers of Choice
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057

Taking Price Seriously in Commercial Due Diligence (CDD) Mandates

By Jeff Merkle

Using pricing as a lever is massively powerful, yet pricing is an often overlooked and underappreciated part of diligence. Several years back, one of the large corporate finance consultancies did some modeling using income statements from the top 1000 firms – they found that a 1% increase in average price with an “inelastic” customer base (i.e., no resulting change in demand) resulted in a…
055

De-risking and Leveraging Brand Equity Ownership in Commercial Due Diligence

By Jeff Merkle

In Commercial Due Diligence, it’s often the assumption that customer relationships are an “asset” of the business, but that’s not always the case. The reality is that for many businesses, the quality and stability of customer relationships are owned by account representatives (and possibly only a few reps) – who walk out the door with those assets every night, and who (for the right…
054

Brand Equity: Institutionalized or Individualized?

By Jeff Merkle   VIDEO

Evaluating the degree to which Brand Equity lies with a target company versus with individual sales and service reps of the company should be a key exercise in Commercial Due Diligence - for both the benefit of valuation and for value gen opportunity assessment. Determining the clues that enable methods for institutionalizing the relationships drives strength of recurring/repeat revenue,…
041

Winning in the Swing States – Commercial Due Diligence Lessons from Political Strategy

By James Tetherton

2024 will see national elections in both the US and the UK.* In both cases, the election will be won and lost in a handful of key marginal seats (or “swing states,” for US readers) - constituencies where the winning margin at the last election was less than 5% of the vote.
040

Assessing Price Sensitivity

By Mike Rose

Price sensitivity is a tricky subject to interpret correctly – doubly so in the tight timeframes common to current diligence windows. I’ve seen a lot of consulting reports that I believe misinterpret price sensitivity – either overstating or understating price in a ranking of decision makers’ Drivers of Choice. The importance of price in decision making is a critical question in any…
038

The Greater Potential of Brand Equity Analysis to Drive Far More Significant Acquisition Returns and Deal Value

By Mark Stein

In every commercial due diligence assignment, clients reasonably expect a proper brand equity analysis. And yes, good diligence requires the requisite measures (i.e., relative brand familiarity, performance on the most important drivers-of-choice, likelihood to recommend/promote, etc.). Investment teams and the IC will always want to review these findings and take stock of the implications. But…
037

Dig into the Buzzwords…Early

By Phil Craig

Effective commercial diligence processes don’t boil the ocean - they focus on the most critical issues in a timely manner, and in an optimal order. One of the biggest barriers to doing so is the pitch’s use of buzzwords. I put together five examples of costly, non-obvious, buzzwords often presented by management and bankers - and my suggestions for what you should probe for early, in response…
019

Using Diligence and the Ownership Change to Leverage What Matters to Customers

By Mark Stein

Conducting commercial diligence that matters should equip the new owner and the leadership team with insights that can quickly make an impact on market share and pricing opportunities (among other opportunities).
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.
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…

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