Due Diligence Archives

Manufacturing in the Modern Age: Data-Driven Insights into Challenges, Solutions

September 11, 2023 Kyle Johnson

The manufacturing sector, historically a cornerstone of economic prosperity, is going through a transformation. As we navigate the intricacies of this evolution, data is our compass.

Industry professionals grapple with sourcing specialized talent, particularly on a geography-specific basis. They’re also navigating complex supply chain dynamics, which require both regional and global considerations, and are affected by disruptions and economic fluctuations.

There’s also a pressing need to balance operational challenges with long-term strategic growth, all while integrating technological advancements and ensuring optimal production processes.

Since 2021, BluWave has seen an increase from 61.3 percent of manufacturing activity in value creation (versus due diligence) to 78.6 percent – the highest it’s been since 2017.

Let’s dive into some of the trends driving this and other changes.

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The Talent Conundrum in Manufacturing

The manufacturing landscape is shifting, and with it, the demand for specialized talent. A staggering 74 percent of manufacturers cite “attracting and retaining a quality workforce” as a top challenge, according to the National Association of Manufacturers. As the manufacturing sector becomes more specialized, the demand for niche talent has skyrocketed.

Human capital activity is at an all-time high within the manufacturing activity index, accounting for 45.5 percent of all industry projects in 2023. That’s a more-than 500 percent increase since 2017, due to use cases like interim executive searches and specialized recruiters.

Beyond the numbers, there’s a qualitative challenge, too. It’s not just about filling positions but hiring visionaries who can lead in an era of rapid change while balancing granular details with a broader strategic perspective.

In the face of these challenges, manufacturers are seeking partnerships with specialized firms, emphasizing the importance of regional expertise and industry-specific knowledge. The goal is to secure leaders who can drive innovation and navigate the complexities of the modern manufacturing world.

WATCH REPLAY: Manufacturing Webinar

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Navigating the Supply Chain Labyrinth

Supply chain disruptions have become the bane of the manufacturing sector, with 45 percent of professionals identifying it as a top challenge, per NAM. The intricate dance of sourcing raw materials, managing inventory and ensuring timely deliveries has become even more complex.

Supply chain management is one of the top use cases BluWave sees within manufacturing operations, with make up more than 18 percent of industry activity.

Effective supply chain management is no longer just about logistics; it’s about ensuring a seamless flow of materials, information and services, all while mitigating risks.

Supply chains have evolved into intricate global networks. Data indicates that disruptions, whether due to geopolitical tensions or unforeseen global events, can have cascading effects. Manufacturers are now tasked with not just managing but optimizing these complex systems, ensuring resilience and adaptability.

The emphasis is shifting from reactive measures to proactive strategies. By leveraging data analytics and predictive modeling, manufacturers can anticipate disruptions, adjust in real-time and ensure that the supply chain remains a strength rather than a vulnerability.

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Economic Realities: The Balancing Act

In a world where 56 percent of manufacturers (per NAM) are wary of a “weaker domestic economy,” economic agility is paramount. Manufacturers must be adept at navigating economic headwinds while capitalizing on opportunities. The insights from BluWave’s client interactions reveal concerns ranging from revenue challenges to market dynamics.

That makes agility paramount. With fluctuating markets and the ever-present specter of global events, manufacturers are in a constant state of adaptation.

By understanding market trends and leveraging data-driven insights, manufacturers can identify growth areas, optimize production and ensure they remain at the forefront of industry innovation.

The Digital Transformation: Beyond the Buzz

The future is digital. A significant 43 percent of manufacturers planned to ramp up their technology spending in 2023, according to Alithya. From optimizing operations to strategic decision-making, technology is reshaping the manufacturing landscape. The emphasis on IT strategy and diligence in client interactions underscores the sector’s tech-driven trajectory. Manufacturers that fail to embrace this digital shift risk being left behind.

Among the top technology-related manufacturing use cases we’re seeing are system selection & implementation, and IT strategy and diligence.

Successful digital transformation, however, requires a holistic approach. It’s not just about technology but about aligning organizational goals, processes and culture with these digital initiatives. Manufacturers must ensure that their teams are equipped with the skills and knowledge to leverage these tools effectively, driving both efficiency and innovation.

Growth in the Face of Uncertainty

Growth remains a top priority for manufacturers, but it’s a goal fraught with challenges. Data highlights the importance of strategic expansion, ensuring that growth is sustainable and aligned with broader market trends. In an era of uncertainty, it’s not just about growing but growing smartly.

Strategic partnerships play a crucial role in this growth narrative. By collaborating with experts, whether in technology, supply chain management, or market research, manufacturers can tap into specialized knowledge, ensuring their growth strategies are both data-driven and future-focused.

The manufacturing sector is at a crossroads, shaped by technological innovations, economic challenges, and global trends. But with challenges come opportunities. By leveraging data-driven insights and forging strategic partnerships, manufacturers can navigate this complex landscape, driving growth and innovation.

For a deeper exploration of how data-driven insights can shape your manufacturing journey, reach out to our team.

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Healthcare Compliance: Due Diligence Checklist

August 21, 2023 Kyle Johnson

Healthcare is a hot sector for private equity firms looking to acquire new portfolio companies.

Buy-side commercial due diligence on healthcare compliance is table stakes before any deal gets done.

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One expert service provider from our network says his firm has seen an influx of diligence requests in this industry since the beginning of 2022, and it hasn’t slowed down since.

“There continues to be a lot of interest in the healthcare sector, whether it’s device manufacturers or contract manufacturers, and even services,” Don Jenkins* of M&A Healthcare Experts says. “Whether it’s tele-health-related services or just other technology platforms that can address healthcare service delivery.”

Here are some of the top trends and must-haves in healthcare due diligence.

Private Equity: Healthcare Sector

With so much money to spend on hand, Jenkins says that middle-market private equity is all over the map.

When he thinks about the last 50 projects they have done for private equity firms, he estimates they would span 20 different markets.

There are a couple, however, that have stood out since as we head deeper into an uncertain, if not turbulent economy. One of those is healthcare.

Firms want to dig deep to learn more about the devices and software systems being used in hospitals. Just as popular, though, are in-home services that allow people to receive diagnosis and treatment from the comfort of their home. This trend has become especially important since the onset of COVID.

Healthcare Due Diligence Process

“Essentially the goal of commercial due diligence is to validate the story that the target’s telling, or to identify the reality of the marketplace out there so that they can make an informed decision on their investment,” Jenkins says.

While the fundamentals of commercial due diligence are the same from one market to another, there are nuances to businesses based in hospitals, pharmacies and other related medical organizations.

Since these companies are creating or using products that affect people’s health, there’s increased risk, which means more scrutiny is needed.

“It can be a very different set of objectives, but if it’s a product, then there definitely will be regulatory issues involved,” Jenkins says.

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Top Trends in Healthcare Due Diligence

Service providers in healthcare aren’t just trying to make better products and improve services, they also want to be more affordable.

“It’s still technology, but we’re not trying to design the greatest device, the greatest stent in the world, or the greatest cardiovascular diagnostic product ever made,” Jenkins says. “It’s really what sort of products and services can we develop that are going to not only get the job done, but do it in a more cost-effective manner so that it’s more affordable for the healthcare ecosystem.”

In particular, that ecosystem includes insurance providers and patients. The easier it is for them to engage with a health company’s products or services, the more successful the business will be.

“There are just a lot of moving parts in healthcare that make it an interesting space,” Jenkins adds.

BluWave co-head of research and operations Scott Bellinger most frequently fields calls related to these areas:

Medical Devices: “Regulatory review on manufacturing processes to make sure they’re FDA compliant.”
Operational Diligence: “Understand how you can manufacture those devices at a faster more efficient clip.”
Ancillary Service Buildouts: “For example, if you’re ear, nose and throat, do they have an ambulatory services center?”

Jenkins isn’t the only one seeing an increased demand for commercial due diligence in healthcare. It continues to be one of the most important industries to our clients as well.

That’s why we spend so much time connecting with and evaluating due diligence service providers who know healthcare – and every other sector that touches private equity – inside-out, backward and forward.

Our research and operations team takes a hands-on, white-glove approach to every project they service, from the first scoping call until after the engagement is complete.

If you’re looking for proven, PE-grade service providers to conduct buy-side diligence on your healthcare acquisition, contact us today. We’ll provide two or three best-fit options for your exact situation and specific needs within a single business day. From there, we’ll hold the third-party resource accountable and make sure they’re meeting all your needs until the ink is dry.

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*Privacy is important to us. While the source and company name have been changed, these are real quotations from a real service provider in the BluWave Business Builders’ Network.

What To Do When Your Service Provider is at Capacity

August 15, 2023 Kyle Johnson

Connecting with a service provider you can trust is like looking for a great dentist. Once you find “the one,” you wouldn’t put your teeth in anyone else’s hands.

The same goes for your business. After a successful engagement with a trusted third party, you save a lot of time by contacting them directly the next time you have a need.

There are reasons you have go-to service providers: they’re fast, reliable and they know your business.

But if you love them so much, you’re probably not their only client. Far from it.

So what happens when you reach out and they tell you they simply don’t have the capacity to take on more work on the timeline you need? Or worse yet, they give you their B-team.

We’re glad you asked.

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There are a number of reasons service providers could suddenly be in high demand. A bounce-back from a recession. A surge in deal flow. A hot new trend of which everyone’s trying to stay ahead.

When this happens, BluWave is on standby with a deep bench of trusted, PE-grade third parties who can deliver the exceptional work you expect no matter what your industry.

In fact, we experienced this post-COVID recovery when the whole world got back to business at once and it seemed like there wasn’t enough help to go around. At that time, we heard from dozens of private equity firms that couldn’t book their preferred third-party resource.

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We helped those firms by connecting them with industry-specific firms and consultants that understood their business’s most pressing needs.

Every service provider in the Business Builders’ Network has gone through a rigorous vetting process, giving us confidence in every match we make whether it’s a first-time engagement or a repeat relationship.

BluWave founder and CEO Sean Mooney has three tips for organizations when their usual service providers are at full capacity.

1) Use Alternatives

“If you’re go-to is sold out, don’t try to force them into giving you capacity. You’ll get the C team,” Mooney says. “There are plenty of other comparable PE-grade specialists that you should use.”

2) Use Substitutes

“There are other diligence and value creation products that go by a different name but still serve your need,” he adds. “For instance, if you can’t get a commercial due diligence group to meet your deadline, use a voice of the customer group to do a deep dive on your target’s customers.”

3) Use Independent Consultants

“There’s a select world of independents who spun out of name-brand shops and can give you the same product at a fraction of the cost,” Mooney says. “This cohort works well not only for commercial diligence, but also for operational and HR diligence as well as value creation.”

Mooney recognizes that trusting your most important work to new partners can be scary. With the right introduction, though, the risk can have a huge payoff.

“Using new groups can be nerve-racking,” he says, “but the BluWave network of PE-grade resources is on standby to meet your specific needs.”

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Whether your go-to service providers are at full capacity, or you just don’t know who to turn to, give our research and operations team a call. They’ll connect you with a shortlist of exact-fit third parties within a single business day, and be by your side until the completion of the project.

Buy-Side Deal Sourcing Strategies: Uncovering Hidden Opportunities

June 29, 2023 Kyle Johnson

Deal sourcing in private equity is all about finding hidden opportunities and maximizing investments. Effective deal sourcing strategies can greatly influence an organization’s trajectory.

When done well, the rewards can be outsized. To increase your chances of success, working with industry-specific, experienced third parties can give you a leg up.

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Let’s talk about a world-class service provider’s role in buy-side deal sourcing, as well how BluWave can get you connected to the right ones.

Effective Deal Sourcing Strategies

Deal sourcing is about identifying investment opportunities, and the right strategy can make all the difference – one size does not fit all. Customization is key, depending on the industry as well as the PE firm’s investment objectives.

Comprehensive Market Research

To spot lucrative opportunities, you need to conduct in-depth market analysis. Identifying emerging trends and sectors with high-growth potential is a critical step in this journey. A data-driven approach can help you spot these gems before others do.

READ MORE: How To Analyze Sales Data

Working with an exact-fit service provider that knows how to collect and analyze reliable data can accelerate efficiency at this stage.

Networking and Relationship Building

Cultivating a robust network within your industry can give also you an edge. Contacts at private equity and venture capital firms, brokers and other industry professionals often have extensive networks and in-depth market knowledge.

When you tap into the Business Builders’ Network, you can be connected with the resources you need for your exact situation within a single business day.

Proactive Outreach and Deal Origination

Initiating dialogue with potential sellers can uncover off-market deals and hidden opportunities. Utilizing digital platforms, conferences and industry events for networking could yield unexpected results.

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Deal Sourcing in Private Equity

The private equity landscape presents unique challenges that demand unique strategies. Expertise in the industry, meticulous due diligence and strategies for value creation are integral to successful deal sourcing.

Deep industry knowledge allows for better evaluation of risks and opportunities. It supports an understanding of market positioning and the development of industry-specific value creation strategies.

Due diligence goes beyond ticking boxes, though; it provides a comprehensive understanding of the target company’s fundamentals. It is an essential part of deal sourcing, as it helps identify risks and validate assumptions, making for more informed investments.

Leveraging Third-Party Expertise in Deal Sourcing

Finding your way through the maze of deal sourcing can be challenging; leveraging third-party expertise can save you a lot of headaches. A specialized resource brings industry knowledge, experience and proven methodologies to the table, increasing your chances of success.

This is where BluWave shines, connecting organizations with exact-fit service provider. BluWave’s research and operations team, with their industry expertise and extensive network, can help your organization uncover hidden opportunities and navigate the complex world of buy-side deal sourcing.

To reap the rewards of successful investments, it’s crucial to follow effective deal sourcing strategies. Recognizing emerging trends, building robust networks and adopting proactive outreach methods can uncover hidden opportunities. In private equity, in-depth industry knowledge, meticulous due diligence and a keen eye for value creation are key.

Although this can be challenging, you don’t have to do it alone. The BluWave team is here to support you whenever you’re ready. Reach out to us today.

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Buy-Side Commercial Due Diligence: What is it?

June 27, 2023 Kyle Johnson

Commercial due diligence is a make or break process in mergers and acquisitions.

In buy-side due diligence, the focus is on the acquiring party, rather than the target company. This makes it distinct from sell-side due diligence, which is conducted by the organization that may be acquired.

“It’s standard operating procedure for private equity firms if they’re buying a company,” says Scott Bellinger, Bluwave’s co-head of research and operations. “No matter how good a company is, if the market is bad, it won’t succeed.”

Buy-side commercial due diligence looks extensively at the target company’s overall viability. It’s typically conducted by private equity firms, investors or other acquiring entities to evaluate risks and opportunities before signing on the dotted line.

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We’re going to explore the key aspects of this process in private equity acquisitions, including financial analysis, commercial viability assessment and target company analysis.

Financial Analysis

Understanding a company’s financial health is a crucial aspect of buy-side commercial due diligence.

At this stage, the buyer reviews the target company’s financial statements, including balance sheets, income statements and cash flow statements.

A qualified finance professional can be invaluable in this step.

Market Size

Market size is also an important pre-acquisition consideration.

It helps identify potential financial red flags, such as declining revenue, which could suggest a shrinking market. If too many warning signs arise, the buyer may reconsider moving forward.

Working with an industry-specific service provider can help with this, saving your firm from a bad deal, or confirming a good one.

READ MORE: What is Commercial Due Diligence?

Total Addressable Market, Commercial Viability Assessment

A successful acquisition is contingent on the future growth potential of the target company. That’s why a commercial viability assessment forms an integral component of the process.

Here, the total addressable market (TAM) for the target company’s products or services is evaluated. Understanding the TAM provides insights into the potential growth and profitability of the target company, making it a critical metric for prospective buyers to consider.

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Competitive Landscape

Another important factor is the competitive landscape within the target company’s market. This evaluation gives the buyer a comprehensive understanding of the company’s positioning, its main competitors and the regulatory environment in which it operates.

A thorough understanding of the competition and industry regulations can provide valuable insights into the target company’s resilience and adaptability in the face of market changes.

Target company analysis is another aspect of buy-side due diligence, and it usually comes toward the end of the process.

While the entire due diligence process evaluates a target company, the goal at this stage is to review operations, management and culture. This is how the buyer identifies issues that could affect the acquisition’s long-term success.

Voice of the Customer

Assessing customer satisfaction, identifying potential customer concerns and understanding customer loyalty can all help better understand the target company’s potential long-term success.

An exact-fit service provider will focus on things like customer lifetime value, retention and how products and services can be improved.

Target Company Evaluation

While the entire commercial due diligence process involves looking into the target, firms should also take a close look at a company’s operations, management and culture.

Before signing on the dotted line, it’s important that you not only align on values, but that the teams are a good fit for working together.

This also helps the buyer – usually a private equity firm – understand the potential synergies between the target company and their existing portfolio companies.

Bellinger says that working with an expert third-party to conduct buy-side diligence can be a huge advantage.

“You can get providers who have deep experience in a certain industry or certain types of companies that can perform the study on a lower cost profile than a brand name firm who will have to spend time getting up to speed,” he says. “Our providers already know everything about that industry and have prior experience.”

Buy-side due diligence is a critical process in private equity acquisitions, enabling buyers to make informed investment decisions.

BluWave has expertly vetted commercial due diligence resources on standby to provide comprehensive support during the buy-side due diligence process.

Our research and operations team will connect you with the best fit for your project, ensuring that you have access to the right expertise at every step of the process. Set up a scoping call today.

Bellinger adds: “We have the most amazing bench of buy-side commercial due diligence providers, so we know every buy-side firm in middle-market private equity.”

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The Power of AI, Data Analytics in IT Due Diligence

May 30, 2023 Kyle Johnson

In today’s interconnected business landscape, a company’s value and performance are largely influenced by its technological prowess.

That’s why IT due diligence is an essential component of any business transaction. IT due diligence is a key aspect of mergers and acquisitions, focusing on a comprehensive review of a company’s IT infrastructure, software, data management and cybersecurity measures.

This assessment identifies potential risks and opportunities, offering vital insights into compatibility and potential integration issues that may arise during an M&A transaction.

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The Role of AI and Data Analytics in IT Due Diligence

The emergence of Artificial Intelligence (AI) and data analytics has ushered in a new era of possibilities for IT due diligence. The capability to process large volumes of data, identify patterns, and make accurate predictions has revolutionized the traditional due diligence process, providing a more robust view of the target company’s IT landscape. These advanced technologies can illuminate potential IT risks, uncover hidden synergies and even predict the future performance and needs of the IT landscape.

The Value Proposition of AI and Data Analytics in IT Due Diligence

Incorporating AI and data analytics into the IT due diligence process offers a multitude of benefits:

Efficiency: AI’s capacity for rapidly processing and analyzing large data sets drastically reduces the duration of the due diligence process.
Accuracy: AI algorithms minimize the risk of human error, thus ensuring a more accurate analysis.
Predictive Power: AI’s ability to identify trends and predict future performance offers valuable foresight.
Cost-Effectiveness: By automating routine tasks, AI can result in significant time and cost savings.

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Implementation of AI and Data Analytics in IT Due Diligence

The application of AI and data analytics in IT due diligence involves a step-by-step process:

Data Collection and Preparation: Comprehensive data on the target company’s IT assets and operations are gathered and meticulously cleaned and prepared.
Selection of AI and Data Analytical Tools: Appropriate AI and data analytics tools are chosen based on the unique needs of the due diligence process.
Analysis and Insight Extraction: This stage focuses on deriving meaningful insights that can guide the M&A decision-making process.
Reporting and Decision Making: The final stage involves presenting the findings in a comprehensible format, which can inform strategic decisions about the transaction.

Challenges and Risks in AI and Data Analytics for IT Due Diligence

While AI and data analytics offer significant benefits, their implementation isn’t without challenges:

Data Privacy and Security: Compliance with data privacy and security regulations is paramount during the due diligence process. It’s crucial to meet the standards set by regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).
Algorithm Bias: Algorithms can inadvertently perpetuate existing biases. Therefore, transparency and fairness in AI application must be ensured to avoid skewed analysis results.
Data Quality and Completeness: The quality and completeness of the data can significantly impact the success of AI and data analytics in IT due diligence. Poorly maintained or incomplete data can lead to misleading insights and flawed decision.

READ MORE: Benefits of Hiring an Interim CTO

The Future of AI and Data Analytics in IT Due Diligence

Looking ahead, the role of AI and data analytics in IT due diligence is set to grow:

Continuous Improvement in AI Technology: As AI technology evolves, we can anticipate more sophisticated tools offering deeper insights and greater accuracy, revolutionizing the M&A landscape.
Increasing Importance of Cybersecurity Assessment: As cyber threats proliferate, assessing a company’s cybersecurity practices is becoming increasingly crucial. AI can facilitate thorough cybersecurity risk assessment, adding an additional layer of protection during M&A transactions.
Real-Time Analysis and Predictive Modeling: AI advances could enable real-time analysis during IT due diligence, offering immediate insights. Improved predictive modeling capabilities could also facilitate forecasting of future IT needs, contributing to a comprehensive understanding of the target company’s potential.

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To optimize the benefits of AI and data analytics in IT due diligence, organizations should consider developing internal capabilities or collaborating with external experts. With its expertise in connecting organizations with the right service providers, BluWave can be an invaluable partner in this journey. Whether you need assistance in selecting appropriate AI models, interpreting complex results, or mitigating potential risks, BluWave can guide you through the due diligence process, helping ensure successful M&A transactions.

Ready to enhance your IT due diligence process with AI and data analytics? Contact BluWave’s team today, and let us connect you to the perfect resource for your needs.

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Marketing Due Diligence: Comprehensive Checklist

May 30, 2023 Kyle Johnson

Marketing due diligence is the thorough analysis and evaluation of a company’s marketing strategy, with the goal of identifying strengths, weaknesses and opportunities for improvement. Conducting proper marketing due diligence can be the tipping point toward increased profits.

Digital marketing due diligence, an integral component, focuses on the company’s online presence and digital strategy. Expert outside help that intimately knows your industry can streamline this process.

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Let’s talk about the different aspects marketing due diligence and why a BluWave-grade third party might be just the resource you need.

Conducting Marketing Due Diligence – Best Practices

Marketing due diligence is intertwined with your organization’s business plan, strategy and understanding of competitors and customers. It provides a foundation to determine if you could sell more to the same customers, use different channels or adjust your product messaging. Each component of the due diligence process provides insights that can optimize your business and accelerate growth.

Assessing the Business Plan and Strategy

Reviewing your business plan is a crucial part of marketing due diligence. It allows you to determine if your goals, targets and outlined strategies are still feasible and aligned with your overall marketing plans. Consideration of future marketing trends, innovation potential, scalability and adaptability to change should be central to this assessment.

It’s also important to stay vigilant about the legal side – industry-specific regulations and data protection and privacy laws can significantly impact an organization’s marketing efforts.

Assessing the Marketing Strategy

The digital marketing strategy is a key component of the main marketing strategy. Implementing digital marketing best practices such as maintaining a relevant social media presence, optimizing SEO performance and improving website usability and CTR is table stakes.

Furthermore, it’s important to note that good results from marketing campaigns don’t necessarily equate to profits. Focus on strategic goals like sales, profitability and customer acquisition. Understanding your target market and audience is key in this regard.

Analyzing the Competition

Competitor analysis is vital to understand how your organization performs relative to others. Identifying competitors’ marketing strategies, competitive differentiators and budgets can provide valuable insights. Uncovering their unique selling propositions (USPs) and identifying the advantage your company has can enhance your competitive edge.

Analyzing the Customers

Understanding your customers’ perspective can provide valuable insights into your marketing strategy. Identifying who your customers are, what values are important to them and what they want to see can provide valuable insights. It’s also beneficial to find out why customers like your company and what could potentially sway them toward a competitor.

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Marketing Due Diligence Checklist

The process of marketing due diligence can be complex and extensive. Following a structured checklist can help ensure that all key aspects are covered.

Business Plan and Strategy Checklist

When assessing your business plan, consider the following questions:

What does the business plan look like?
Does the company have a clear plan for profits?
What are the competitive advantages?
How many goals does the company have? Are they realistic, well-defined and quantifiable?
Did you review data protection and privacy policies? Are there any industry-specific regulations to keep in mind?
Did you outline any future marketing trends, innovation potential, scalability or adaptability to change?

Marketing Strategy Checklist

For your marketing strategy, consider the following:

Does the company have a niche within the industry? Is it sustainable?
What is the company’s message? Is it clear within the market?
Is the brand recognizable?
What are the active channels? Could they be changed or expanded?
What marketing tools are being used?
How are you measuring results? What KPIs are you using?

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Competitive Landscape Checklist

To fully understand your competitive landscape, consider the following questions:

What’s the overall company positioning in relation to its competitors?
What are the marketing dynamics?
How do company sales compare to competitors?
What is competitor pricing?
What are the main economic, competitive or regulatory risks?

Pricing and Margins Checklist

Pricing can significantly influence consumers’ decision-making processes. The point is not just to be cheap, but well-calculated. Consider these questions:

What does the price sensitivity analysis look like?
What’s the company’s pricing strategy (target pricing, margin pricing, etc.)?
Is the pricing structure sustainable? What could impact the pricing in the future? (e.g. rising electricity costs, raw materials costs, etc.)

READ MORE: Hire an Expert Pricing Consultant

Customer Checklist

Understanding your customers can give valuable insights. Ask these questions:

What does the customer analysis look like? What trends did you identify?
Is it possible to interview clients and build case studies?
Is there a potential for cross-selling?
Could the positioning be improved?
Can you measure the loyalty of your customer base?

Mastering marketing due diligence can be an intricate process. Fortunately, there’s a deep bench of niche-specific service providers on standby to help.

BluWave’s research and operations team can connect you with an exact-fit service provider to help you navigate your marketing due diligence. Take the first step toward optimizing your strategy by contacting BluWave.

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In the Know: Proactive Due Diligence Practices

November 19, 2022 Delaney Walker

As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients. In our most recent installment, Keenan Kolinsky, BluWave Consulting Manager, shares some of the proactive due diligence practices we see PE firms take that separate the more innovative private equity firms from the others. Learn more by watching the video below.

Interested in connecting with PE-grade specialized due diligence providers for your next need? Contact us here to quickly get connected to the ones you need.

Video transcript:

Due diligence is a critical piece in the private equity deal cycle, and we equip hundreds of leading private equity firms with the right PE-grade diligence providers they need – and when they need them. Performing thousands of projects every year, we gain a unique perspective to some of the more proactive and innovative approaches to the diligence process, and I want to share two such approaches we’ve seen that are separating some of the more proactive private equity firms from the others.

Number one, using the right diligence providers for the right deals. Many private equity firms have a go-to list of commercial, IT, and operations diligence providers they leverage for nearly every deal. However, each deal’s different and may require a different slate of providers to get the most out of each unique diligence phase, or diligence stream, depending on a variety of factors such as the target’s industry, the deal size, target technology or operational nuances, timing, and more. Many of our proactive private equity clients realize these nuances, and we support them by connecting them with the diligence providers whose functional capabilities, expertise, and experience account for these factors – uniquely positioning them to deliver excellence on that deal. This allows private equity firms to gain better insights with more speed and certainty, which, in turn, optimizes the entire diligence process for the respective deal. In private equity, one size does not fit all.

Number two, expanding the functional breadth and depth of diligence. Times are changing, and it’s more important than ever to get diligence right and to gain the necessary actionable insights, not only to make a more informed investment decision, but also to begin equipping the value creation plan. Especially in today’s market, value creation doesn’t and can’t end with only commercial, technology, and operational levers.As such, many of our proactive private equity clients are institutionalizing increasingly common diligence streams such as HR, digital, data, and ESG diligence to inform both investment decisions and value creation plans. We continuously map the market for PE-grade diligence providers across various functional areas, industries, price points and more so that you don’t have to.

If you or your teams are using the same slate of diligence providers for every deal, it may be time for a refresh. As you start to consider your slate of diligence providers for your next deal, give us a shout at info@bluwave.net and let us connect you with the right diligence providers for the right deal.

In the Know: Due Diligence for Better Deals

October 6, 2022 Delaney Walker

As part of an ongoing series, we’re sharing real-time trending topics we are hearing from our 500+ PE firm clients in our “In the Know” series. In our most recent installment, Consulting Manager, Scott Bellinger, covers due diligence for better deals – sharing the top due diligence resources we equip clients with and why firms come to us with their needs.

Learn more about how we equip PE firms with the exact-fit commercial due diligence, IT diligence, and operational diligence providers they need exactly when they need them.

Interested in learning more about how we can support your diligence needs? Learn more in our Due Diligence hub.

Video transcript:

In the past few weeks, The BluWave Activity Index has shown that due diligence activity is picking up as we quickly approach Q4. Heightened deal activity means that it’s more vital than ever to ensure you’re utilizing diligence providers that can equip you with the unique insights you need to inform a wise investment decision. We quickly connect PE firms to specialized diligence providers that they need so that they don’t have to waste time vetting providers by availability, budget, and industry expertise. Here are some of the top diligence resources we are connecting our PE firm clients with.

First, commercial due diligence. Commercial diligence has become standard operating procedure for all of private equity, not just the large cap firms. With deal stakes high, investing in commercial due diligence upfront is vital. To maximize the output of commercial due diligence efforts. We connect firms with specialized providers by industry who already know the market. This allows them to dig in deeper, faster, and equip them with market and company insights generalist providers are not capable of.

Next is IT due diligence. Nowadays, every business has cybersecurity concerns. An unknown, as well as unaddressed cyber risk, can wreak havoc on an investment down the road. Proactive PE firms of all sizes are choosing to invest in IT due diligence efforts upfront so that they can preemptively address problems and challenges that could occur in the future. As the technology landscape constantly changes, so do the diligence providers in the space. In order to combat this for our clients, BluWave continuously maps the market in order to always be on the forefront of knowing what providers are best suited for what PE firms need at any given time.

And finally, operational diligence. Gone are the days where small process improvements in a portfolio company led to high returns. Now it is all about transformation. Ops due diligence providers go into a target company during the LOI phase to review their processes and begin identifying opportunities for growth so that you can hit the ground running on a well-developed value creation plan immediately post-close. We connect our clients with industry-specific providers they need so that they can gain the nuanced insight that can transform a company only industry veterans would glean. At BluWave, we are here to connect you with exact-fit, PE-grade diligence resources you need at the exact time you need them. If we can provide you with the resources you need to bolster your due diligence process, or if we can support any other third-party needs that you may have. Contact us at info@BluWave.net.

September 2022 Roundup: BluWave Client Insights

October 4, 2022 Kyle Johnson

BluWave works with over 500 PE firms from around the globe as well as their portfolio companies and proactive independent companies, connecting them with BluWave-vetted, best-in-class, third-party service providers across a variety of resource and functional areas. From information technology and manufacturing to healthcare, consumer goods, and beyond, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news and insights you can use.

Check out the latest, curated collection of our client’s musings on employee-based ownership, developing ICPs, creating an employer brand, and more.

KKR: Employee Ownership

Seeing success after implementing broad-based employee ownership programs in several portfolio companies, Pete Stavros, Co-Head of Americas Private Equity at KKR, shares his insights on the benefits of employee ownership.

ParkerGale: Developing ICPs

ParkerGale operating partners Cici Zhang and Paul Stansik speak on the importance of defining an Ideal Customer Profile (ICP) and discuss their steps to building out an ICP.

Listen to Podcast>>>

Insight Partners: Building an Employer Brand

With an increasing emphasis on talent and a push towards putting employees first, it is critical for employers to proactively work to attract and retain top talent. Insight Partner’s Talent COE, Hattie Young, identifies a 4-step process for building a compelling employer brand to attract the best talent.

Montage Partners: Questions Sellers Should Ask

The diligence process should be a two-way street. Montage Partners highlights diligence on the sell side and provides questions sellers should be asking potential buyers.

Blackstone: Dealing with a Tough Market

With recession risks in the US and global economy, Joe Zidle of Blackstone gives his insights to dealing with a tough market, speaking to inflation, a strengthening labor market, and shifting consumer demand.

Read what some of our clients had to say last month on value creation through human capital, continued recessionary pressures, DEI, digital marketing, and more.

March 2022 Roundup: BluWave Client Insights

April 8, 2022 Delaney Walker

BluWave works with over 500 PE funds from around the globe as well as their portfolio companies and proactive independent companies, connecting them with pre-vetted, best-in-class, third-party service providers across a variety of resource and functional areas. From information technology and manufacturing to healthcare, consumer goods, and beyond, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news and insights you can use.

Check out the latest, curated collection of reports, insights, and musings from a handful of our PE fund clients on everything from ESG to cybersecurity, and inflation to sales.

Advent’s Managing Director, Tricia Glynn, talks with the chair of Goldman Sachs’ Investment Banking division about a wide array of topics including investing through an ESG lens; trends in the retail, consumer, and leisure sector; and her economic outlook for 2022.

Listen to their discussion>>>

The COVID-19 pandemic accelerated many businesses’ plans to move more and more digital. With this change comes an increased risk in terms of cybersecurity. With a cyberattack estimated to occur every 39 seconds, Blackstone shares insight into how their portco Vectra has developed an innovative solution to this problem.

Learn more >>>

Scot Duncan, MiddleGround co-founding partner, speaks on a panel covering sustainable profitability in manufacturing companies. He shares ways MiddleGround’s portfolio companies are increasing revenue amidst an environment of supply chain challenges and labor shortages.

Watch the panel >>>

ParkerGale’s Paul Stansik is joined by two guests to talk about prospecting and how to get growth right. They share their varying opinions on how to prospect well, the evolving role of the BDR/SDR, and more.

Listen to the podcast >>>

If you are in need of resources that can help you with ESG, cybersecurity, pricing woes, or sales & marketing, we can quickly connect you to the PE-grade, pre-vetted, exact-fit ones you need. Give us a shout.

Read what some of our clients had to say last month.

Why Specialized Commercial Due Diligence is Vital for PE Funds

February 8, 2022 Kyle Johnson

2021 was a record-breaking year for private equity, with total deal value reaching $1.2 trillion according to Pitchbook, and it isn’t expected to slow down in 2022. With record amounts of dry powder in the market ($1.32 trillion as of September 2021), S&P Global states that the demand for deals is driving valuations up. Between the pressure to find the right deals in a market that is flooded with opportunity, and the high prices that have to be paid in order to win a deal, commercial due diligence is more important than ever in order to ensure funds are being spent wisely.

A process that was once reserved for large cap funds with extra capital to spend on assessing a company’s potential end market in order to determine the soundness of the investment, commercial due diligence is quickly becoming a necessary standard operating procedure for all proactive PE funds. With this evolution of who is utilizing commercial due diligence comes the evolution of how it’s performed– no longer is it an activity reserved for generalist consulting firms. Private equity firms have discovered that in order to drive alpha in a sea of beta, smaller, more specialized commercial due diligence providers can provide them with more unique insights quicker.

Going Deeper Faster

Any consultant can accomplish commercial due diligence’s goal of providing intelligence on a target’s total addressable market, prospects for growth, competitors, risks, and other vital information through initial industry research. But specialized consultants with pre-existing industry knowledge don’t have to waste their time scratching the surface trying to gain a sense for the industry. Instead, they can provide a heightened sense of value by using their base knowledge to dig deeper and therefore provide more in-depth insights in the same amount of time.

This is why it’s no surprise that over the past 3 years, commercial due diligence has remained the #1 Use Case in the BluWave Due Diligence Index. Firms have recognized the long-term value that lies in going outside of their normal providers to work with small shops and independent consultants that can provide deeper insights faster.

Providing a Head Start for Value Creation

Commercial due diligence isn’t just a process that helps PE funds make wise investments – it establishes a foundation for future growth. The average holding period for PE assets is five years, which is a sound reminder that funds are often interested in forging long-term relationships with the companies in their portfolio. This is why it’s essential for the commercial due diligence process to be more than a routine vetting exercise and a perfunctory look at a company’s market. It should help funds explore opportunities for growth and methods of adding value that can turn a company into something its leaders never imagined.

By providing deeper insights into the nuances of an industry and having experience within it, specialized commercial due diligence providers are uniquely equipped to identify various opportunities for a target’s growth. With multiples at a historic high, this head start on value creation initiatives ensures your team will be able to hit the ground running and provide quick returns on the investments.

Ensuring Available Capacity

In a market flush with M&A activity, we experienced deal surges in 2021 that led to provider scarcity, especially within the larger go-to commercial due diligence providers. A benefit of specialized commercial due diligence providers during these times is their more available bandwidth. Because they aren’t being run to with projects across 8 different industries, they have the capacity to take on the projects that fall directly within their sweet spot. Even when service provider constraints have strapped the market, BluWave has maintained a 100% fill rate with commercial due diligence requests.

Over the past year, we have seen many firms that have resorted to a smaller, more specialized provider in times of scarcity permanently switch their processes going forward to always using a specialized provider due to the valuable insights they gained. In times where other PE firms are struggling to get the insights they need on the timeline they need, equipping yourself with unique insights quickly will provide you with competitive edge.

Interested in seeing how we’ve helped PE firms by connecting them to the specialized commercial due diligence providers they need? Check out these case studies:

We’d be happy to get started on connecting you to the specialized commercial due diligence provider you need, just give us a shout or use the “Start a Project” button in the banner above.