Assessing DTC Value Ahead of Company Sale

The challenge

A private equity firm preparing to sell one of its portfolio companies, a pet technology business, wanted a deeper understanding of the company’s customers, key trends and growth prospects, as well as the performance and value of its direct-to-consumer (DTC) business. The company had made significant investments in this channel and wanted potential buyers to recognize it as a key strength in the sale process.

L.E.K. Consulting was engaged to conduct a full market study, including a comprehensive DTC assessment centered on customer metrics such as lifetime value, transaction patterns and upgrade rates. The goal was to quantify customer engagement and demonstrate DTC channel performance, along with highlighting the contribution of that performance to enterprise value.

At a glance, our client:

• Needed to evaluate DTC customer performance and channel contribution ahead of sale
• Sought to demonstrate the strength of customer engagement and value creation within the pet technology market
• Wanted potential buyers to recognize the DTC channel’s differentiated value and contribution to the company’s growth

Our approach

As part of the market study, we conducted a data-driven evaluation of the client’s DTC business, analyzing detailed transaction and customer data to quantify engagement and long-term value. The team segmented customers by cohorts informed by the date of first purchase, the category of initial purchase and purchasing behavior over time, including repeat rates, upgrades and attachment metrics.

Through this analysis, we identified clear evidence of high customer loyalty and strong lifetime value, confirming that the DTC channel was a meaningful driver of growth and retention.
Beyond customer-level analytics, the team examined the broader pet products market to contextualize the company’s position for potential investors. We assessed total market size, key segments and growth trends, complemented by consumer insights to understand owner preferences and brand performance versus competitors.

Finally, we outlined the future potential of the DTC business by identifying long-term levers for growth and continued value creation, reinforcing its importance to the company’s investment thesis.

Key elements of the approach:

• Conducted detailed analysis of customer behavior, retention and lifetime value in the DTC channel
• Benchmarked company performance within the broader pet care market using consumer and competitive insights
• Highlighted channel strengths and long-term growth levers to inform the company’s sale narrative

The results

The analysis equipped the client with a robust understanding of its DTC performance and market position, supporting a compelling equity story ahead of sale. Our findings enabled the client to articulate the strategic value of its DTC channel with confidence, reinforcing it as a source of recurring revenue, strong customer engagement and sustained growth potential.

Impact delivered:

• Quantified DTC performance through customer lifetime value and retention analysis
• Strengthened the equity story by demonstrating the DTC channel’s strategic and financial value
• Positioned the company as a high-quality growth platform in the attractive pet technology market

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