The popularity of buy and build on both sides of the Atlantic has seen more Private Equity funds analysing new geographies nationally and internationally, to source local winners for acquisition. The corresponding need for local (city or service area) data lends itself well to digital analysis. At a high level, this might include:
› Local market demand – identifying how many people seek your product or service in a new location and who currently captures that demand
› Location-specific reputation – measuring sentiment and perceived strengths / weaknesses for the local branch of each competitor over time
Both are scalable inputs for decisions on opening or acquiring new locations for any site-visit or local-service-based business model. They can be used on a standalone basis or combined with e.g. existing market studies or knowledge from the original platform investment and its management team.
In the last year, Palladium has been active in a broad range of rollups including residential services (from pest control to roof repair), consumer activities such as casual dining and physical retail, education for individuals and businesses, and a wide variety of clinic-based or residential healthcare.
What can be learned with location-specific data?
Analysing demand (e.g., search volumes) across thousands of keywords provides a comprehensive view of the addressable market for a service, product, or company in a specific location over the past four years. By aggregating these, we can deliver robust insights that can answer questions such as:
- Does this location show disproportionately high demand (e.g., per capita or percentage growth) for this category, making it an attractive expansion opportunity?
- Do prospective customers search generically for the service, or do they have a provider in mind? What does this mean for market entry or share capture?
- How fragmented is the competitive landscape, and who are the leaders by scale and growth?
- Does the target have strong local brand equity, and what are the marketing and integration considerations for our platform?
On the sentiment side, we can capture and aggregate reviews and other feedback sources for the local branches of each competitor to determine:
- Are there any reputational risks for our target (in one location or across all)?
- What are perceived strengths and weaknesses versus peers, and how has this changed over time?
Private Equity Applications
Because these digital signals are scalable at source (i.e. no need to e.g. recruit additional survey panellists per location) and come with historical trends as standard, the applications are equally flexible. Across both platform and bolt-on investments in the last year, the Palladium scope has included the following focuses:
1. Location validation
Testing the demand and competitive dynamics within proposed expansion cities / regions against current locations to calibrate the appeal of each possible expansion. Can be used to validate existing plans, or as a means of scanning a broader range of locations to identify new prospects.
Key question: Do the proposed locations for new sites / M&A offer the right balance of market demand and opportunity to win share?
2. Bolt-on opportunity source and screen
Using digital scans to identify competitors within each location, and evaluate them using outside-in proxies for scale and growth. Output can provide a ranked list of potential targets based on investment criteria.
Key question: Based on proxies for scale and growth, who are the local winners and are there any competitive threats to their position or momentum?
3. Early-stage diligence (outside in)
A light but data-rich assessment of a potential target, considering its local market and competitors, including the regional presence of national players.
Key question: What are the local competitive and market dynamics, where / how does our target win versus competitors and what are the prospects for post-acquisition integration and growth?
4. Sales and marketing analysis
With local visibility and digital marketing increasingly core to customer acquisition, understanding current performance versus modelled opportunity can inform the growth plan and expectations following integration with the existing platform.
Key question: Does the target have an optimal go-to-market strategy, and what can centralised platform resources expedite?
5. Reputation benchmarking
Holistic analysis of reviews across platforms (e.g. Google, Yelp, Trustpilot) for the target and its competitors
Key question: How well does the target generate awareness / inbound demand, and is its perception driving or hindering sales?
Contact us
The precision and scalability of digital diligence make it versatile across the entire investment timeline—from origination and pre-diligence to completion—while informing the value creation thesis at every stage. To discuss how Palladium’s comprehensive offering might fit your diligence toolkit, contact Ben Martin.
Ben Martin
Global Head of Transaction Advisory, Growth
ben.martin@palldiumdigital.co.uk
