Background and challenge
A leading private equity firm was considering an investment in an outsourced electronic manufacturing services (EMS) company. The client engaged L.E.K. Consulting to evaluate prospects for long-term market growth and the target company’s competitive positioning.
Approach and recommendations
We began by conducting consumer research to understand macro trends and growth drivers in the EMS market. Further, we completed online surveys to gain insight into customer behavior, key purchase criteria and purchase process dynamics in the industry. We concluded that the overall EMS market was well positioned for growth due to its positioning in the value chain and favorable tailwinds.
Afterward, we conducted primary research campaigns to assess the competitive landscape for the target company, including a benchmarking analysis against key competitors. We determined that the target company is strongly positioned within the market due to the following characteristics:
- “Sticky” customer relationships
- Limited risk of price erosion
- High-quality assets in less cyclical end markets
- High barriers to entry in its niche segment
As a result, we concluded that the company represented an attractive target given its strong competitive positioning paired with favorable industry trends.
Results
We delivered a market assessment report that gave the client confidence in making a go/no-go investment decision.
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