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Helping a private equity firm earn market leading returns on an Internet of Things (IoT) asset

Deal Strategy - Success Story 2

Exit strategy: optimizing returns on an IoT disposal, by effectively positioning the organization’s financial and business model.

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Eye of a needle

The private equity investor owned a growing&nbspIoT service provider in high demand. The investor wished to ensure maximum&nbspreturns for both its investment and for the management team, knowing it was in&nbspa ‘hard-to- understand’ and high-growth telecoms/tech segment where approaches&nbspto reviewing markets, financial performance and valuation varied significantly.&nbspThere were also strategic/trade partners and financial sponsors who were likely&nbspinterested in the asset, each with a different level of understanding.

The private equity firm and IoT service&nbspprovider management team therefore sought strategic thinking, industry insight,&nbspchallenge and M&ampA support as a commercial vendor diligence package. They&nbspvalued the GSG practitioners’ leading experience in developing growth&nbspstrategies for industry players and their deep understanding of fast-changing,&nbsptech-enabled industry disruptors and emerging business models. The GSG team’s past&nbspexperience in providing commercial diligence to support successful PE exits&nbspalso demonstrated an ability to work with management teams, investors and other&nbspadvisors to de-risk the M&ampA process.

The GSG team articulated the complex,&nbspchanging market structures, assessed growth drivers and emerging profit pools,&nbspand calibrated key features of the target’s business and operating model:&nbspproduct features and service, indirect sales channels, platform IT, and financial&nbspmodel that highlighted the attractiveness of unit economics. GSG’s review of&nbspmanagement’s plan identified further value from accelerating growth in new&nbspproduct and geographic profit pools, from both organic and inorganic&nbspstrategies.

GSG’s strategic advice in evidencing value&nbspdefensibility and upsides led to the IoT service provider successfully&nbsptransacting to a financial sponsor at market-leading valuation multiples.  

Unless the context otherwise requires, throughout this website “Global Strategy Group”, “GSG”, “KPMG”, and “KPMG network” (“we”, “our”, and “us”) generally refers to the member firms of the KPMG network of independent firms affiliated with KPMG International, a Swiss entity that services as a coordinating entity for the KPMG network. KPMG International provides no client services.

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