A leading US buyout house was looking to purchase a large stake in a US-based company specialising in banking technology. The business had a large European client-base and our client wanted to know how the firm’s products were perceived in the European market compared with its competitors and where its products needed to be improved. It was also keen to gain an understanding of general trends and developments in the industry and assess future opportunities and challenges. It therefore commissioned IE Consulting to carry out a commercial due diligence study in the European market focusing in particular on product perception.

We developed a tightly structured commercial and reputational due diligence project to our client’s specifications focusing on product perception and competitor analysis. Working closely with our client we compiled a list of 15 investment banks (both current customers and potential targets) and conducted in-depth interviews with both syndicate managers and senior technologists at these establishments.

We identified that the study would have the most impact by examining the following areas:

1. Perception of the product compared with competing systems (both internally developed and third-party); issues included usability, quality of technology, flexibility, price and service levels.
2. Features/capabilities that were currently not available and that banks wanted to see developed
3. Industry developments – trends that could change the way transactions were executed within individual banks and across the industry as a whole.

Due to the sensitive nature of the project interviews were conducted in a highly discreet manner without any details of the potential acquisition being revealed.

Although the interviewees tended to be extremely reticent about the systems they had in place, our team was able to secure extremely valuable information for our client.

• The interviews revealed that, while the target’s system was generally highly-regarded, it was losing ground to competitors in terms of usability and price. Our analysis of the results allowed us to ascertain the exact areas where the system was considered to be weak, as well as allowing us to recommend a pricing structure that would be more acceptable to smaller banks.
• Flexibility was also cited as an issue, with competitors praised for their willingness to adapt the product by incorporating corporate logos, colours etc.
• Many banks expressed concern that a number of high-growth areas, such as structured products, were not catered for by current systems. This information allowed us to provide the client with new business development opportunities and to inform them of competitor activities.