When it comes to knowing your market, size matters.
Strategic decisions are frequently hinged on assumptions around market size, as it informs the scale and magnitude of opportunities. And the higher the stakes of the decision, the greater the importance of accuracy in modeling the size and outlook.
Market modeling exercises are most common in M&A diligences. Buyers need to know the size and growth potential of a target’s market. And it is an imperative backdrop of the equity story for sell side advisors. In addition, portfolio managers and large corporates require accurate size and growth metrics of key segments to clarify priorities and balance risks.
And as with most complicated processes, success is ultimately measured by the caliber and discipline of the approach. With decades of experience identifying and evaluating companies, we have the search-and-screen process down to a science. Whatever the driver, VantagePointe can help.
How Pointe can help
In many cases, market modeling is a subset of a broader consulting arrangement. But, it doesn’t have to be. With hundreds of market sizings under our belt – from $50M regional SAMs to $500B global TAMs – we have the process down to an art. VantagePointe generates thoughtful, thoroughly-researched market models on tight timelines. Our process is centered around several steps:
Developing evaluative frameworks to support the identification of attractive market segments and geographies
Define the target’s addressable market and segment based upon articulatable commercial logic
Create proprietary datasets – using both strategic partnerships with data vendors and primary research – to support modeling exercise and ensure high confidence in the output
Build top-down and bottom-up models for each relevant segment of the market
Develop multiple scenarios with probabilistic weighting on likelihood to clarify distribution of potential outcomes across forecast period
Relevant use cases
A middle market private equity firm required a deeper understanding on the size and outlook of the SAM for a specialized distributor of highway equipment. Modeling efforts required a detailed segmentation across multiple states and dimensions. Pointe deployed advanced analytic and statistical techniques – GIS, regression analysis, etc. – to develop original datasets that informed a top-down market model. The result was a granular, scenario-based model that clarified key assumptions for the sponsor.
Pointe completed a financial review of a $500M+ accounting services company for a global PE firm. Pointe’s evaluation led the firm to re-work its thesis and develop a winning bid during exclusivity period. Pointe also supported the management team post-close with the development of its commercial excellence roadmap, focused on pricing optimization and implementation of best practice KPIs.
In support its strategic planning and capital allocation processes, Pointe developed a detailed opportunity assessment for the global professional services firm examining a new market. The assessment included market sizing, growth, segmentation, and share, as well as the identification of access routes, including acquisition. Pointe’s analysis helped the client best position itself for success in the space. Moreover, Pointe identified several high potential acquisition targets to accelerate growth market penetration going forward.