Deal Value Creation

A successful deal requires a clear value creation roadmap. As part of a contemplated M&A transaction, investors and companies alike must proactively consider what will drive post-deal value. This can be in the form of synergies, operational improvements, financial excellence or strengthened governance.

Even before the deal is completed, significant value creation opportunities can be identified, typically as part of the commercial and financial due diligence process.

Embedding a value creation lens into the due diligence ensures that consideration is given not only to financial risks, adjustments, the business plan and the market outlook but also to opportunities for growth, profitability improvement and cash and working capital optimization.

Even within industry-leading organizations with strong overall financials, a value creation assessment empowered by a proprietary performance improvement framework and advanced data driven analytics will reveal opportunities to support the valuation and equity story.

KPMG in Vietnam and Cambodia supports investors and companies to conduct rapid deal value creation reviews, both on the buy-side and on the sell-side. Once the deal is completed, we work shoulder-to-shoulder with our clients to plan, implement and monitor the identified initiatives and realize the value at deal speed.

• Our client was a global investor seeking to invest into a consumer company.
• Before committing their investment, our client wanted to understand the unit economics of the Target’s operations, products and suppliers by segment as well as over time.
• Additionally, our client requested us to conduct a rapid Deal Value Creation opportunity assessment to understand the potential working capital and EBITDA improvement opportunities available.

• We conducted a rapid Deal Value Creation assessment as part of the due diligence on the Target, collaborating closely with the Financial Due Diligence, Commercial Due Diligence, Environment, Social & Governance (“ESG”) Due Diligence and Tax Due Diligence workstreams. 
• We rapidly consolidated, cleansed and analyzed daily transactional and monthly P&L data from the Target to establish and visualize a holistic unit economics assessment.
• We conducted brand performance, store cohort analysis / store vintage analysis and geographical analysis to determine areas of high performance and underperformance, and to identify potential drivers for this.
• Whilst the Target reported strong top line results, a significant proportion of stores and products were underperforming. 
• Additionally, the Target operated a widely dispersed supplier base, with many local contracts and inconsistent terms and conditions in place.
• KPMG formulated 10+ EBITDA and working capital improvement hypotheses and quantified the post-deal opportunities for each. We supplemented this with an external peer benchmarking to validate the potential size of the prize.

• $20m EBITDA improvement opportunities were identified across 10+ hypotheses, validated through external peer benchmarking.
  
• We presented the client with a clear segmentation of opportunities by value, priority and complexity to lay out the roadmap for implementation prioritization.
• We provided deep, actionable insights and recommended tangible next steps on each hypothesis, allowing our client to work with the Target’s Management to realize the EBITDA and working capital improvements post-deal.