Demonstrate the organic growth potential

The challenge

Our client is the shareholder of a large chain of apparel stores with over 400 point of sales internationally, selling over 10,000 different products.

The client was about to initiate a disposal process and wanted the vendor due diligence to precisely analyse the organic growth potential of his business, which was a key parameter for the deal. In order to support the equity story and confirm the assumptions factored in the business plan, our client wanted the VDD to analyse and quantify historical organic growth and its drivers.

This analysis had historically been difficult to perform due to the complexity of business drivers (large amount of SKU’s, several collections, presence in several countries), the fast development of the store portfolio and heterogeneous charts of accounts across the group.

The client had not performed this analysis before and wanted to do so using different angles (by region, product, concept, etc.) which also added some degree of complexity and need for a dynamic approach.

The outcome

We built an auditable and comprehensive dataset comprising detailed financial information for each store. This dataset was combined with data analytics techniques to measure the Like-for-Like performance of the store portfolio using different definitions and axes of the LFL.

Our client could now explore high-level group trends and underlying drivers at the store level, adding layers of visibility for internal management and  their advisors and bidders. This served as a single source of truth for the transaction.

Our approach allowed the VDD to precisely demonstrate the strengths of the business model and illustrate it in their report. In addition, our analyses helped Management refine assumptions to be factored in the business plan and build a strong case around it.