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Commercial due diligence and PMI planning in support of acquisition of industrial company by a Japanese manufacturer

Background and Challenge

Our Client, a Japanese manufacturer, was considering making an investment in a foreign-based industrial company. Our Client hired L.E.K. to assess the Target’s business plan including the markets in which it participates, its positioning within each market, its strategy going forward and associated financial projections. Additionally, the Client asked L.E.K. to develop a post-merger integration (PMI) plan and to support a successful integration of the Target upon closing.

Approach and Recommendations

L.E.K. assembled a team from its resources in Tokyo and the U.S. to assess the attractiveness of the Target company’s markets, understand the Target’s competitive positioning, refine its financial projections, and overall validate (or refute) our Client’s investment thesis.  The projects focused on the U.S. market but also covered the Target’s operation in other key markets across other foreign countries.

Based on extensive market research and analysis, L.E.K. suggested that target company’s business plan and projections to appear aggressive.  L.E.K. leveraged its research program and analyses to provide the Client with a revised forecast that better aligned with market sentiment regarding the outlook for the Target.

L.E.K. designed a PMI plan and supported implementation of the plan from the time of the announcement of the transaction. The plan included identification of potential challenges facing the two organizations during integration, identified key personnel across both the Client and Target essential for business continuity and successful execution of the Target’s business plan, and developed a list of prioritized strategic integration initiatives.

Results

Based upon L.E.K.’s diligence, the Client was provided with sufficient understanding of the Target’s business and future outlook to give it confidence to move forward with the transaction.  L.E.K.’s PMI planning provided valuable support to ensure a smooth integration between the two companies after closing.