By using the Hybrid Growth Diligence approach, we helped assess the intrinsic value and confirm the resilience of the target’s business model by testing:
- To what extent the production volumes already committed through customer contracts secured the growth forecasted over the Business plan period;
- The achievability of forecasted level of EBITDA, which depends on the ability to effectively manage a complex industrial plan, both in terms of construction of new plants and ramping up of existing facilities;
- The strategic plans for managing the processes and cost of securing raw materials, energy and employees in a challenged macro-economic environment;
- The sensitivity of assumptions made about the total level of cash needed to finance the project (including capex completion, financing of EBITDA losses, etc.);
- The overall strength of a complex value chain, including risks associated with managing variables such as the plants’ construction, the supply chain, equipment maintenance, energy, plants’ lease agreements and potential deals with industrial partners.
In validating the target’s ability to grow at scale
and its path to profitability
, we helped our client confirm its investment thesis.