Proposal 2 - Pre-DD for Market Entry by Acquisition
Hike during Company Outing
Duration/Members:
This was the first proposal that I was staffed from beginning to end of the presentation, so I was able to get a good look into exactly how the partner works, and how we wanted to craft a storyline for this particular proposal we had to draft. We had around 8 days to work on it, and I started off with a PM (just us two) for the first 2 days, and then were joined later by 3 more members to help finish the proposal file.
Work/life balance was pretty bad (for a proposal), getting off around 1 AM on average, but having 2~3 days going home at 3~4AM. The deadline for submission on the last day was 9 AM, so I'll just leave it at that, on thinking when we finished working the last day.😞
Background:
The industry in question was around the chemical materials (particularly, additives and resins) business; and the project type was geared towards a Pre-DD (Due Diligence) project. The client wanted to enter a particular chemical specialties biz, and the preferred method of entry into the market was through an acquisition, of a target that was recently available for sale.
The target company was a subsidiary of a large Oil & Gas Company, and seeing that the target was an international one, we had first understand the market in itself, before trying to see what were the possible synergies that we could located and develop throughout the project, if viable.
The industry itself, was very difficult to segment, as chemical additives, resins, and all that good stuff, are very multi-pronged in its application areas and end-use industries. Because most of the material are derived from the same feedstock, but simply extracted at different degrees, it is difficult to gather the sufficient detail of information of where the feedstock is sourced from, and the technology that each company has in regards to processing and extraction methods to pinpoint what are the exact derivatives we need to focus on. And of course, gathering accurate marketing sizing data, in an industry where exact segmentation is nearly impossible, was not that great to begin with.
We tried to differentiate ourselves from the competition participating in the proposal (Big 3), from mostly having more depth into the market segment with less publicly available information. Although not that common, we were able to conduct some benchmarking expert interviews of the company in question, figure out the target company's market position, and the key success factors required to thrive in this industry. On top of that, we actually ended up purchasing a research report (by one of those large market research companies) in order to get a firm grasp about the market structure, and the expected growth drivers of the market.
Intuitively enough, since these chemicals are incorporated practically everywhere (from adhesives, sealants, tires, synthetic rubber, female hygiene product, construction materials, etc.) industrialization played a key part in growing markets, and specific growing industries, such as the automotive and construction industries seemed to be key areas to focus on, with a growing need to improve the wear and tear performance of tires, and the textiles applications having much more usage in construction.
What I learned/Work style:
It was definitely a learning experience into the basics of the derivatives that come from the Oil & Gas sector. I guess I haven't been exposed to such a practice area before, so it was quite new and exhilarating to learn about this new area, that seems to be somewhat basic knowledge were anyone to be in this broad field. I never really could get my head around how the crude oil is extracted, and then processed through crackers (steam, ethane, etc. - pick your poison), and the polymerization that is required to create these additives and resins that can be applied in a multitude of industries.
All in all, I guess I was able to experience the full cycle of a proposal drafting. In the beginning, obviously I was the one task with the market research, which took around 2 days to fully organize (excel-based), and then the next couple days were fully just drafting slides, working around the storyline with some (little) guidance from the partner and PM, and conducting expert interviews via teleconference to gather insight and ideas about the direction we wanted to take the message. Since it was a proposal, the necessity for depth is less stringent when compared to an actual project; there is some fun in the fact that you can just directly apply your ideas onto a slide, (there is more freedom to it) rather than having to verify it to the tiniest details.
Consulting lingo: and work modules
Pre-DD/ M&A strategy
identifying synergy streams with target company and client
Market identification and targeting
Market sizing, and identifying growth areas
Market trends and actions taken by competitors
Identifying Barriers to entry and key success factors of the industry
Assessing capabilities and strengths of target company
Reviewing alternatives to a M&A (organic growth vs. other possible targets)