Supported a Middle Eastern private equity fund on the commercial and technological due diligence of a SaaS ERP provider and an IT service company in the MENA region
Our client, a state-backed fund focused on cloud and data services, cybersecurity and next generation technologies investments, commissioned Fide Partners to develop the commercial and technological due diligence of two potential acquisitions: an ERP software developer company and an IT consulting firm that was planning on integrating a new SaaS based service line.
Solution
For the commercial and technological review of the ERP software developer, we analysed the competitive landscape, the target’s positioning and pricing strategy to identify market opportunities and threats. We reviewed the target’s hiring and marketing plans to assess whether they were adequately sized to cope and drive its expansion plans.
We also examined the target’s internal IT plans and its product roadmaps, as well as the technical capabilities of its solutions. We developed our own 5-year financial projections based on the target’s pipeline and market growth, challenged some of the vendor’s assumptions within the business, notably through the benchmarking of SG&A costs and EBITDA margins. Analysed potential cost and revenue synergies in the event of an acquisition by our client.
For the commercial review of the IT consulting firm, our evaluation included a comprehensive market overview, understanding of the business plan and GTM strategy, client base, organisational structure and staff. We challenged the feasibility of the business plan revenue compared to the expected growth in both the IT services and disruptive technology markets at granular levels, analysing the diversification and cross-selling achieved with the client base. We also focused on understanding the competitive positioning of the target’s services and marketing in comparison to Tier 1, Tier 2 and niche/local IT services players.
Our technological review of the IT consulting firm included the assessment of the company’s current and upcoming solutions and infrastructure, identifying gaps in the functionalities of its software and certifications of key staff.
Result
We adjusted assumptions over EBITDA margins SG&A costs and synergies, identified a critical absence of IT personnel, and discovered the potential quality and security risks in their software. Ultimately, we provided the client with an accurate and deep understanding of the investment opportunity and strengthened their negotiating position.
