Diligence Matters Best Practices Briefs

The Next Step Beyond NPS (Net Promoter Score)

By Eoghan Bees

A common metric leveraged in commercial diligence – NPS (Net Promoter Score) – is based on a single and simple question presented to users of a good or service: “On a score of 0 to 10, how likely is it that you would recommend [XYZ] to a friend or colleague?” The metric and the question are designed to measure current satisfaction, and the design logic of the question (and the associated…

Taking Price Seriously in Commercial Due Diligence (CDD) Mandates

By Jeff Merkle

Using pricing as a lever is massively powerful, yet pricing is an often overlooked and underappreciated part of diligence. Several years back, one of the large corporate finance consultancies did some modeling using income statements from the top 1000 firms – they found that a 1% increase in average price with an “inelastic” customer base (i.e., no resulting change in demand) resulted in a…

Gaining Momentum Around Price Early in Diligence

By Jeff Merkle   VIDEO

During the diligence window, savvy investors are increasingly seeking early signals on the pricing opportunity – for both valuation and value gen considerations. Gaining an understanding of the pricing opportunity starts with a walk-through of multiple pricing factors. Chief among the various diagnostics is the pricing waterfall - the walk-down from list to pocket price, and identification of…

Credit in the time of COVID

By Jeff Merkle

Any statement on the level of disruption that 2020 has served up risks being an understatement. In addition to reconsidering personal lives and routines, many investors have been forced to rethink world views on risk and downside – a subject we’ve been spending immense time on over these past 6 months. While GRAPH prides itself on thinking creatively about value gen opportunities for new…

Pricing Journeys

By Jeff Merkle

The origins of this GRAPH Papers® article are in recent client requests: with deal prices necessitating robust value creation plans, clients have been continually driving projects around EBITDA growth. As commercial specialists, we think about growing the top line as four factors:

Assessing Price Sensitivity

Price sensitivity is a tricky subject to interpret correctly – doubly so in the tight timeframes common to current diligence windows. I’ve seen a lot of consulting reports that I believe misinterpret price sensitivity – either overstating or understating price in a ranking of decision makers’ Drivers of Choice. The importance of price in decision making is a critical question in any…

Diligence Methods to Measure Price and Price Sensitivity, and the Opportunity to Improve Margins

By Mark Stein

Most commercial diligence projects will query the channel and the end-customers to measure price sensitivity. Most CIMs will have a graph indicating the degree to which customers are, or are not, sensitive to price – and suggesting room for margin enhancement. However, relying on customers’ or the channel’s expression or “vote” on price sensitivity can lead to false commercial diligence…