Background and challenge

A large power products manufacturer was considering the acquisition of a residential battery energy storage system manufacturer with small market share. The acquiring company enlisted the help of L.E.K. Consulting to evaluate the target company and determine its growth prospects.

Approach and recommendations

We began by researching the structure of the residential battery energy storage system market to provide context for our recommendations. This included identifying use cases, market needs by application and various software offerings. Digging into market dynamics more deeply, we assessed customer and channel behavior by application and use case. For example, one important finding was that nearly all residential battery energy storage systems were sold with, and installed alongside, a rooftop solar system set up by solar installation contractors.

Next, we conducted a thorough examination of the competitive landscape (examining both battery energy storage system competitors and those within energy management software), creating a set of competitor archetypes based on capabilities. We also looked at how the electric utilities and utility software providers were playing in this space, how they expected the market to unfold and the role of battery-driven micro-grids.

We evaluated where the target company fit into the picture. We looked at its growth opportunities and outlook given its position in both the battery energy storage system and energy management software markets. We also explored how prospects for our client and the target might differ and how our client might improve the target’s competitiveness were the company to acquire it. 

In addition to transaction support, we assisted with the development of a go-to-market and storage dealer strategy, which required researching and understanding solar and storage installation contractor and dealer requirements and other needs ahead of a product launch.

Results

Our analysis provided the client with an in-depth understanding of the structure of the residential battery energy storage system market, as well as the strategic benefits of this deal and how this potential new product would fit into its current sales network. The comprehensive commercial due diligence report we prepared helped inform the client’s purchase decision and thoughts about strategic positioning. 

Following the addition of the battery energy storage system to the company’s power product portfolio, our support enabled the company to conduct a successful product launch. 
 

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