Private Equity Owned For-Profit College
Evaluate Market Dynamics to Confirm Investment Premise
A leading middle-market private equity firm had built a platform investment in for-profit education, largely based on the premise that the professional nursing market would be facing a labor shortage as the baby boom. The investors became concerned as the “great recession” of 2007-2009 created havoc in the labor markets. The firm had heard commentary that, due to the recession, older nurses were delaying retirement, resulting in reduced hiring of new nurses. The firm asked us to confirm this market dynamic and to help them understand it short and long-term impact. We conducted a comprehensive study, featuring interviews with nursing professors, deans, and students; hospital hiring managers; professional nurses and hospital management; as well as state nursing associations and labor economists of who had studied the well-documented “nursing shortage.” Our study confirmed that the nursing market was in fact being impacted in the short-term. With the majority of nurses being female, and the economic downturn disproportionality impacting males, we discovered that older female nurses were delaying retirement and even working more hours in order to compensate for work lost by their spouses. We also discovered a new trend – that an even more severe shortage of nurse educators was on the horizon – which created both an operational issue but also a potential competitive advantage for the firm.
Petroleum Industry Equipment and Services
Pre-Acquisition Brand Assessment
An established company in the petroleum equipment industry was concerned about marketplace perception if it proceeded with the acquisition of a competitor. The acquiring company, which occupied the premium end of the market, was concerned that an acquisition of the “low-end” target company would tarnish and dilute its premium brand. The company asked us to assess the likely market response, and required that we do so without revealing the potential transaction. We designed and executed a market-wide brand assessment study that cleverly profiled the marketplace’s views of the companies involved. The study paved the way for a successful acquisition and also guided the company as it presented the acquisition to customers.
Private Equity Firm
Emerging Risk Assessment
A leading private equity firm was evaluating the acquisition of a national pet supply retailer when a major consumer products marketer announced the acquisition of the premiere specialty dog and cat food brand. The brand, which was heretofore sold only at specialty pet supply retailers, was the highest revenue line for the pet supply chain and also a strategic item for bringing consumers to the store. Expectations that the consumer packaged goods company would expand the brand into its traditional distribution channel (supermarkets and discount stores) raised serious concerns about the pet supply retailer’s growth prospects. In response, we devised a fast, creative marketplace study, interviewing a broad range of consumers and retail specialists and observing consumer behavior in various retail environments. Our study identified several dynamics that would blunt the impact of the brand acquisition on the specialty retailer. The acquisition proceeded and a few years later, the equity investors successfully exited via an IPO.
Manufacturer of Construction Access Equipment
Market Potential Evaluation
A European-based, private-equity owned maker of vertical access equipment for commercial construction had struggled to establish a viable business base in the U.S. Use of the company’s technology had become standard practice in Europe, but adoption in the U.S. was slow. Their Board sought to understand whether the U.S. market merited further investment, and if so, what the priorities should be. Our research consisted of in-depth interviews with masonry, window and exterior cladding contractors, equipment dealers, competitive equipment makers and other industry specialists. We also conducted a quantitative study to measure regional differences in the way contractors viewed and used the equipment. We concluded that the technology had achieved near saturation in the only two U.S. regions that were likely to accept the technology (due to construction methods, climate and other reasons). Further, we advised that projected slowdowns in the residential building market (in 2007) would negatively impact retail construction, which represented a core segment for the technology. Our research led the client to emphasize other segments of its business in its growth plans and enabled it to avoid investment just as the residential construction market collapsed.
Angel Investor Group
Pre-Investment Due Diligence
A group of angel investors was planning to make an investment in a start-up technology company that had developed a device that would virtually eliminate the need for engine oil changes in large marine and truck engines. The investor group engaged us to help validate the market opportunity and to develop initial marketing strategy. The study concluded that the company’s technology was not commercially viable, on both technical and economic grounds. Ultimately, the investors chose not to back the company as a direct result of the research findings.