Market study: what’s the need?

Preface

“Market Study” has become a catch all phrase to address a range of needs expressed by private capital firms and their management teams.  A wide range of service providers including strategy consultants and market research firms all offer their own brand of market studies, differing significantly from each other in focus, content and depth.  

BSG Growth, comprised of former management consultants and operating managers, offers a broad set of capabilities that are tailored to the specific needs of each client. BSG Growth uses experienced “quarterbacks” to collaborate with all stakeholders in applying the right methods and analytic tools to deliver a customized service.

In the following case, a market study involved evaluating the performance, industry structure and sizing of core and adjacent markets.  However, one of the main needs was assisting all stakeholders in quantifying and prioritizing the strategic growth opportunities (i.e., gaining alignment on the select revenue growth and margin expansion ideas) and translating the “big growth ideas” into actionable operating plans and budgets for tracking and monitoring.   

The story

We were engaged by a private capital firm to conduct a “market study” for one of their portfolio companies - a warranty company they wished to harvest. The engagement initially focused on establishing a fact base for evaluating the growth drivers of the business within the context of industry trends and market growth opportunities. 

After establishing this fact base, we collaborated with the management team to identify growth opportunities, create management’s detailed strategic growth plan and align all stakeholders on key questions, such as where to expand and hedging the risk of initiatives in the event of an economic downcycle.

These materials aided the sell-side preparation and marketing materials leading to a successful exit with a premium valuation.  Following the strategic plan over the next four years, the company was able to double its EBITDA and grow at twice the rate of the market for the new owners.

We were then reengaged by the new owners and management team to assist in their own exit process.

Toolkit application

Growth Frameworks & Analytic Tools

In executing our mandate, we used our operating resources toolkit to develop insights that assessed and ultimately validated the private capital firms’ investment theses regarding this industry. We explored likely future market and economic trends to set the foundation for growth expectations, and we identified and analyzed several growth opportunities for the portfolio company:

• Organic growth opportunities in existing and new geographies through dealer development and new product development

• Acquisition-led growth opportunities that included competitors in non-overlapping geographies; vertical integration of their fragmented agency (sales) base through a “roll-up and integrate” strategy; and entry via acquisition into adjacent markets 

Toolkit Application

Commercial Effectiveness Analytic Tools

As we worked with the management team to develop their strategy, we used our practical business experience and program management tools to translate that strategy into actionable operating plans with concrete initiatives, milestones and objectives. The resulting plan(s) could then be tracked, managed and adjusted or refreshed to keep the business on track over time. For example, we helped them to improve commercial effectiveness by identifying high performer segments and actions to improve revenue by 10-20%.