- Thème:Commercial due diligence (CDD)
- Secteur:Industrial products
Issue
AMR’s client was participating in an auction process to invest in a leading European manufacturer of plastics processing machines. While impressed with the target company’s European-made machines and their technology leadership, the client was uncertain about the target’s plans to introduce low-cost, Chinese-made machines under its high-end brand, mainly to address Asian markets.
Approach
After confirming the target’s leading market position in Europe, North America and Asia, AMR set out to assess demand for low-cost machines made in China, in particular in Asian markets. AMR also analysed the market structure, and the competitive position of leading Western and Asian machine manufacturers within the different market segments. During its research, AMR completed more than 80 in-depth interviews with machine users, market experts, competitors and machine dealers.
Recommendations
AMR found that the target’s plan to introduce low-cost machines in addition to its more expensive European machines was sound, as in most countries there is growing demand for technologically-advanced, yet competitively-priced machines. This market is neither addressed by Asian manufacturers, who operate at the low end of the market, nor by European manufacturers, who typically occupy the upper end of the market. AMR therefore advised its client to proceed in the auction process.
Result
The client accepted AMR’s recommendations and went on to bid for the target, but was eventually outbid by a rival financial investor.
Insight from AMR’s research
European manufacturers and their products are highly regarded in Asian markets, and their brand power can be leveraged successfully to launch low-cost products that address gaps in the market.