Once a target company has been identified, we work closely with clients to answer the more critical questions to their investment decision and ensure they can create sustainable value through the transaction:
- Does the transaction create value for shareholders? If so, how much and what is the walk-away point?
- What are the potential commercial, operational and managerial synergies of the deal and, more importantly, what is the value creation potential of each?
- What is the level of difficulty to capture synergistic value?
- What are the key risks of the transaction and what are the alternatives and critical actions to mitigate those risks?
- What are the key themes that should be prioritized in the Value Creation (Integration) Plan?
Our distinctive approach is grounded on a number of Best Practices identified through more than 20 years of diligence experience for both corporations and private equity funds including:
- Quality time understanding the Investment Thesis: We spend whatever it takes to understand the investment thesis in depth and confirm the rationale of the transaction given a long-term value creation strategy
- Broad Perspective on Synergies and Sources of Value: We help clients identify all critical diligence issues and focus areas across the entire spectrum of value creation levers including Revenue, Cost and Capital synergies. We also make sure that our clients have the appropriate view on the economics of the stand-alone business going forward and that identified synergies are on top of, and, not in lieu of those economics.
- Effective Use of Subject Matter Experts: A high quality diligence process usually requires getting to the bottom of the issues, quickly and with limited information. In our experience this is best done when an industry expert is assigned to the question at hand and has been systematically trained to answer difficult questions based on his/her experience of what is feasible rather than on what is desired.
- Value Analysis Experts: We are experts in translating commercial, operational and managerial insights of the target company into a robust economic evaluation of the synergy opportunity including the operational implications and the ultimate impact on the investment case and deal value.
- Best-in-Class Risk Assessment: We assess risks with an owner’s mindset recommending the deal when a mitigation plan is feasible, and value adding and advise against the deal when the risks erode the value creation potential
- Objective and Integrated View: Our ability to keep an objective and integrated perspective of the transaction is another Argo’s competitive advantage. We don’t provide commercial recommendations lacking the analysis of operational requirements to make it happen, and we don’t consider our operational perspective finalized until we have fully evaluated the operational ability of the target company to support the expected growth potential of the deal.