One of the largest private equity companies wanted to purchase a ultrasound systems manufacturer. The valuation of the target company was very high and their sales forecasts did not match our client’s expectations. We were engaged to conduct a market due diligence exercise on their behalf.
We conducted an in-depth study which aimed to ascertain the validity and veracity of the market date presented by talking to competitors, distributors and agents of ultrasound systems in Europe and the US.
We also undertook an in-depth study to calibrate the awareness and company image that the target company had in different markets as well as the perception of products and services provided.
The market growth forecast was unrealistic. The company failed to mention that one of the leading competitors was launching a new systems that it was likely to take considerable market share in the premium market space. Also, the company had a rather bad reputation with regards to customer service.
Our client decided to go ahead with the purchase but the value of the company was re-visited.