A US-based private equity firm with interests in the industrial sector.
The client was looking to invest in a company with activities in the industrials sector. The funds invested in this company were to be used for expansion in an unexplored vertical. The client engaged SG Analytics to build a detailed financial model that would cover multiple scenarios and determine the investment value using different valuation methodologies.
Based on a detailed understanding of the client’s investment research process and valuation framework, SG Analytics adopted the following approach:
Our team created a 5-year quarterly financial model that identified key revenue and cost drivers of potential target companies.
The team focused on the growth path of these company by analyzing the geographical distribution of their products.
We performed a due diligence and figured that the overall market was growing at c. 6% CAGR, primarily driven by growth in end-user markets, such as automotive, metals, and mining.
We created a detailed model with drivers and switches that would be used to emulate different cost and return scenarios.
The team summarized all insights into a football field analysis that calculated a fair value range based on different valuation methodologies, including DCF and trading and transactions comparables.
SG Analytics delivered a detailed model to analyze the influence of different cost and return scenarios on the investment value.
SG Analytics submitted a football field analysis based on different valuation methodologies.