GRAPH Strategy

At GRAPH, we use a 13-point model to carefully identify customers’ Drivers of Choice – and to critically distinguish the important-but-not-decisive "table stakes” that all qualified providers must have vs. the decisive differentiators (or the “true Drivers of Choice”).     Click here 👇to see our grouped selection of GRAPH Papers®️ articles related to different Drivers of Choice.    https://lnkd.in/efSZYvFC 

Investment teams often make this mistake when it comes to commercial diligence:     They neglect the analytical exercise measuring the relative strength and advantage of the company’s play in specific channels .    But what actually often proves to be the top determinant for who wins the most and drives more sustainable returns is relative channel advantage.     Greater investment returns more often come from companies that cut their OWN channel.     The unique channel play itself often provides enough small, but useful, advantages for customers to drive preference.    Read this GRAPH Papers article by Mark Stein to learn more about how to include and improve channel assessment in your diligence.     https://lnkd.in/dBHFc8AD  

One thing you'll always explore in commercial due diligence:  The target company's competitive position.     Evaluating how the company performs requires careful segmentation and study, as a company’s performance often varies across channels, market segments, and more – and a company’s current client base may not be reflective of the overall market.    👇 Here are a few GRAPH Papers®️ we’ve published that discuss various angles of competitive position and how to approach them in your CDD https://lnkd.in/e3cgvYFg

Something that is critical for evaluating (and creating value in) many investments: Understanding where network effects will hold and where they may break down – in companies across markets as varied as software, recruiting, retailing, media, health provider networks, and many others.  Companies that operate in markets that can contain network effects face either of two major risks:  1️⃣ Being overtaken in a hypercompetitive market where network effects are strong; or  2️⃣ Being intermediated in markets where the network effects are muted    Network effects are important diligence items, but these same considerations can be used by investors in a variety of sectors to enhance the value of services and products they own or manage today.     In this GRAPH Papers article, Jeff Merkle outlines 5 key questions that help determine whether the strength of your investment’s network effect is “just right.”    https://lnkd.in/e9chzqWU

An interesting observation we've noticed: Financial (PE) and strategic (Value Generation) investors often consider segmentation opportunities differently than each other.     Best-in-class corporate development groups bring greater focus to the topic (of customer and/ or user segments) in their provisional investment thesis and value gen plan, AND they bring more pressing segmentation assignments to the diligence exercise. And we know that growth prospects more often than not come from examining the segments rather than treating a prospective customer base in whole.     Read this edition of our GRAPH Newsletter by Mark Stein to learn what segmentation work should look like in an optimized diligence design.     https://lnkd.in/erW3Nscy

“Buyer power,” or the customers’ ability to apply pressure to lower prices or drive improvements in product (and service) quality, features and performance, is a key diligence finding. Equally important findings from diligence are the power and scope of responsibilities that an individual buyer has within their own company. In this GRAPH Papers® article, James Tetherton outlines a Power/Value matrix to help investors more efficiently determine a go/no-go decision and valuation.

Congratulations to the NVM Private Equity LLP team on their win at the recent Thames Valley Deals Awards! Delighted to have supported NVM and Pareto Facilities Management Ltd during their exit to Pictet last November. #GRAPHStrategy #DueDiligence #CDD

Adoption forecasting is a helpful tool during diligence. To improve understanding of the company's purpose in customers’ lives in ways that promote adoption and switch, ensure that your diligence captures all of the target company’s key differentiators and key hurdles for customers. This collection of GRAPH Papers® highlights various differentiators as well as key questions to investigate when searching for customers’ switching motivators.  https://lnkd.in/etbhA9yy  #PrivateEquity #Investments #CommercialDueDiligence

Commercial due diligence will sometimes reveal unexpectedly negative information; this news may be disappointing, but it is incredibly valuable to informing the value creation plan. In this GRAPH Papers® article, @Mark Stein highlights several instructive examples he has encountered.  https://lnkd.in/ecn4d6_g  

Cross-selling is often seen as an easy strategic move to increase sales force productivity while delivering higher value for customers. But frustratingly and all too often, cross-selling produces little more than modest returns and valuation yield for many investors. Integrated offerings, or offerings that combine activities and processes, often result in larger scale gains. By absorbing work that customers would otherwise do themselves, you give customers a great reason to purchase a combined solution.     Read this edition of GRAPH Papers® by Mark Stein to learn three factors that indicate an opportunity for integrated offerings, as well as the value derived from examining the factors early on in commercial diligence.     https://lnkd.in/gaUzt-x3