Background and Challenge
The client, a leading private equity firm, acquired a manufacturer of automotive appearance products and engine additives in a divestiture from a diversified corporate parent. After the transaction, it became clear that one of the key brands faced increasing and focused pressure from its strongest competitor, while another brand suffered from limited innovation, leading to stagnant sales. Additionally, management had not taken advantage of potential high-growth opportunities outside of the United States. L.E.K.'s client sought to better understand the underlying causes of stagnant sales and prioritize the best growth opportunities, both domestically and internationally.
Approach and Recommendations
We conducted a thorough review of the company’s U.S. business, including consumer-decision process and brand perceptions, market trends in the relevant categories, the competitive landscape and retailer perceptions of the brands and growth opportunities. Our recommendations combined a focus on the key revenue and profit-driving brands by re-invigorating both messaging and innovation, establishing a clear short list of growth priorities through new product development, and developing an M&A strategy to supplement the business with a third major brand.
In order to assess international opportunities, we conducted a comprehensive review of the company’s international distribution portfolio then completed “deep dives” in three selected international markets. Based on findings from the international distribution portfolio review, we recommended a prioritization of international opportunities, including the specific markets to pursue directly and a recommended go-to-market strategy in each that reflected key success factors.
We provided the client with a clear growth roadmap for a struggling portfolio company. Our framework enabled the client to set clear performance targets, track the portfolio company’s performance, and prioritize international growth opportunities, resulting in a return to growth and ultimately, the successful sale of the company to a strategic buyer.