Case Study

Business Unit Creation

The Situation

A world-renowned advanced research group of a $10b legacy-sector company was asked to present a plan to its corporate board on the energy & sustainability pathways most synergistic with existing internal capabilities and most likely to achieve superior financial returns.

The research group asked ADL to lead a rapid planning effort to evaluate the entire global cleantech landscape for investment and new technology opportunities to determine the feasibility of forming a cleantech-related business unit. The scope of work included originating detailed business cases with the potential to establish our client as a disruptive leader in a relevant, high-growth cleantech market.

ADL’s Approach

ADL’s proposal

ADL proposed over 40 unique business cases and downselected to the three pathways most likely to deliver outsized financial returns while enabling the organization to adequately leverage existing assets and competitive strengths.

Cases were evaluated in detail based on current and future market size, as well as the client’s competitive advantage and fit. An example plot mapping out the highest return opportunities is shown.

Identifying “blue ocean” markets

We looked at both identifying established businesses that would be accretive to earnings and were likely to exceed the financial targets already provided to investors. Our goal was to identify lucrative “blue ocean” markets through bolt-on acquisitions of profitable enterprises and/or low-cost expansion of existing businesses. We provided the client with a comprehensive market entry strategy, as well as a long-term growth plan incorporating internal and external technologies with “home run” potential in those markets.

We supplemented our strategic business planning with critical market data regarding:

1) Fortune 100 purchasing behavior in major cleantech markets
2) financial market comparables and successful exit comparables and
3) key institutional funding trends.

The example analysis below shows the GHG reduction commitments of the Fortune 100, and the potential convergence point where renewable power investment could become more cost-effective than buying credits.

Results

The team completed a comprehensive analysis and screening process in just 4 weeks, and presented to the corporate board, with a planned 2-hour board conversation expanded to a 5-hour conversation with high engagement and interest. The board requested that the research group accelerate the creation of an internal business unit for cleantech, and bring specific M&A and technology partnering ideas to the table immediately with more detail (work ongoing).
ADL brought to the client a unique capability to screen these initiatives in the analytically rigorous and disciplined manner required by management while bringing creativity and depth beyond traditional financial analysis. ADL leveraged its broad sector experience in energy and sustainability and its deep experience in monetizing internal innovation to provide this legacy sector player with a unique new growth avenue representing hard-to-find differentiation in a commoditized industry.