Background and challenge
A private equity firm focused on investments in quality medium-sized companies across Southeast Asia was evaluating the acquisition of a 25% stake in a beauty and personal care brand (the target).
The PE firm required L.E.K. Consulting’s support in ascertaining the underlying market and channel fundamentals, competitive and target positioning, and key growth levers.
In addition, the PE firm asked us to gather key insights on the voice of the consumer, channel perspectives, operational analysis and management plan validation.
Approach and recommendations
To understand market fundamentals, we did a consumer survey to address key questions around consumption behaviour and purchasing criteria. The survey revealed insights on the impact of COVID-19 on consumption behaviour along with the target’s positioning relative to competitors and the potential of the brand to extend to other categories.
We also outlined the areas for improvement for the target while comparing the target to how its competitors rank on different parameters. Overall, we found areas of improvement to be limited — quality, product innovation, and look and feel of brand presented slight scope for improvement.
In addition, we assessed the target’s perception amongst channel partners and distributors in the geography. We further identified where there was headroom for further expansion or penetration.
Lastly, we analysed growth imperatives to provide recommendations on the target’s management growth plan. This covered various parameters such as sales, price increases, effect of various market forces on prices, sources of revenue from new SKUs, and expansion plans.
Results
L.E.K.’s research and analysis enabled the PE firm to arrive at a decision regarding the transaction. The client went through with the deal and acquired a 25% stake in the personal care brand — a move that made headlines across various countries in Southeast Asia. Since then, the target’s share price has increased by 15%-20%.
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