Advisory on Acquisition of an Australasian Target Business
A multinational investment firm based in 35 locations around the globe.
A servicer and purchaser of non-performing loans, located in Australasia.
To help the client determine fair price and the differentiated capabilities of the Target business.
The Quantum Approach
- Financial – To ratify and provide an independent view on Estimated Remaining Collections (ERC) as well as modelling future monthly revenue across a variety of scenarios using the Quantum Valuation Process (QVP)
- Sales – To determine a sales strategy for the business that allows the Target to shape the type of incoming NPL portfolios rather than simply accepting those that come to market.
- Modelling – A framework and methodology for a suite of models that determine the price to be paid (and cost incurred from servicing), the optimal strategy for servicing the customer throughout the account lifecycle and the monitoring of monthly ERC (estimated remaining collections) on a rolling basis to determine business plan and budgetary targets.
- Investment – To assess current investment and pricing capabilities. Investment Committee terms of reference, pricing memoranda and cost/revenue forecasting capabilities.
- Data Strategy – A comprehensive data strategy covering internal data usage and external data purchased to build operational scorecards and models, including negotiation with key suppliers.
- IT Infrastructure – To provide advice on needed upgrades to a Customer Relationship Management system (CRM), a data warehouse and analytical software.
- Target Operating Model – To assess the existing TOM, efficiency of staff time and the customer outcomes generated.
- Regulatory – To provide a view on potential changes in regulatory compliance and its likely effect on customer outcomes.
- 100/1000 Day Plan – A detailed project plan over 100 days/1000 days post-acquisition to upgrade systems, models and skillsets.
Challenges: Our Client wished to purchase a hybrid debt purchaser/servicer after an assessment of the Australasian market.
The Target Company was a known market player with a reputation as a preferred purchaser due to their compliant collection strategies. However, the Target required help with a scalable data strategy, model suite and operating model to deliver their plan for growth.
Method: Quantum organised an internal workshop with key stakeholders and external meetings with suppliers and competitors to determine the actual and perceived state of the business amongst the wider NPL industry. In conjunction with our on and off-site reviews, QDA performed an independent review of cashflow and generated a new 120-month ERC through use of the Quantum Valuation Process (QVP).
An audit of internal processes showed that the internal technology and analytical capability should be upgraded and relevant suppliers were sourced that could provide the missing competencies. Negotiations with data providers showed that the Target were using a basic level of customer data and wider, and more specific, data items were available that would give greater insight into customer circumstances.
As the deal progressed, Quantum were engaged to provide a 100 and 1000-day project plan with necessary prioritisation to ensure that goals could be met throughout the Client’s potential investment horizon.
Outcome: Using QDAs unique data-led approach, our Client gained insight into the Target’s operational competency and obtained a list of likely post-purchase corrective actions. The QVP provided a realistic assessment of future cashflow used in the successful bid for the Target Company.
Quantum were retained post-purchase to continue to provide further consultancy and manage projects to a close.