Situation: A leading building products distributor was looking to expand its product line and grow through acquisition of a regional distributor serving residential and commercial markets. The Client and the target both served the same geographic market with largely synergistic product lines. Major priorities for the diligence were to size and segment the current and future addressable market. A key objective was to determine if the target was likely to meet its financial projections based on projected market growth, and strengths and weaknesses relative to competition.
Approach: Principia conducted primary research with current and prospective customers, along with supplier and channel checks to assess market growth prospects as well as the target’s competitive position. Extensive data was developed to size the market to understand the underlying construction market drivers in the region and formulate a view on the target’s growth prospects. Over 100 interviews were conducted to determine reasons for purchasing from the target and its peers and identify possible ways for the target to gain share of wallet.
Outcome: Principia validated that the target should be able to meet its growth objectives and identified areas where the Client would be able to drive synergies and realize the expected value from the completed transaction. The purchase of the target closed shortly after diligence was completed.