“I ANALYZE. I SOLVE. I’M AUTHENTIC.

I PASS THE INTERVIEW.

I’M IN GOOD COMPANY.”
PAUL, CONSULTANT
POST-ACQUISITION VALUE CREATION STRATEGY FOR
AN INDUSTRIAL PACKAGING CLIENT
By Marie Deodat and Martin Diessner
CASE SETTING AND INITIAL
QUESTION
THE COMPANY PACKAGINO
The Private Equity Fund TopGrowth has done
a Due Diligence with Bain on Packagino,
a target in the industrial packaging space.
After successfully acquiring the company, the
fund now wants to increase the value of the
company. Due to very rigid savings programs
prior to the acquisition, TopGrowth wants to
focus primarily on growing revenues.
THE QUESTION
The responsible investment manager at
TopGrowth approached Bain and asked the
following question: How can we grow the
company’s revenue over the next five years
and by how much?
INITIAL INPUT / CLARIFICATION
Recommended approach: After ensuring that
you understood setting and question, ask
clarifying questions if necessary. Those ques-
tions should only cover details you need to
develop your initial structure and not infor-
mation that you will require at a later point in
order to solve the case.
BUSINESS MODEL: The client, Packagino is
2
a player in the plastics sector. Their customer
base are business clients active in various
industries. While historically the company has
focused on stretch plastic products, two years
ago they started expanding into strap plastics
through an acquisition.
PRODUCTS: TopGrowth sells consumables,
tools to apply those consumables and ma-
chines to automate the application for both
product lines. Some customers purchase both
product groups, some are specialized and
require only one. The two product lines are
characterized as follows:
• Stretch plastic is a film, exemplarily used as
kitchen protection film or around pallets to
fix different layers together
• Strap plastic are plastic bands to sur-
round products/parcels, melted together
at the ends
APPROACH
INITIAL STRUCTURE
Recommended approach: Take sufficient
time to develop an appropriate structure to
address the key question: How to increase
revenues within the next 5 years. Note down
and explain your structure from the highest
level to the details.
A good initial structure could look like the
following:
MARKET
• Analysis of the growth trend in different
market segments
• Competition situation
• Pricing
CUSTOMERS
• Customer concentration (in terms of sales
share)
• Current sales strategy/approach
• Customer share buying strap, stretch or
both product lines
• Share of total addressable customers
served
PRODUCTS
• Additional sales potential of current
products (to new customers or to existing
customers)
• Possibility and potential of new products
FINANCIALS
• Summary view and expected implications
of suggested actions
CASE SOLUTION
Recommended approach: Clear all areas
you intended to test in your initial struc-
ture and dig deeper into areas where you
discover growth potential. Whenever an
area does not offer further information,
move to the next one. Make sure to take
appropriate notes, so you can form a
conclusion in the end.
MARKET CHARACTERISTICS AND UNDER-
LYING GROWTH POTENTIAL
The underlying markets for stretch and strap
are growing approximately in line with the
overall economy. This growth was already
included in the calculations of TopGrowth.
The market has rather low margins and is
relatively consolidated, i.e. concentrated on
few players. Due to the high relative transport
costs, the market is typically geographically
limited around production facilities.
Those limitations make the acquisition of new
customers very cost-intensive, compared to the
expected profit contribution of those customers.
It is therefore not an option to aggressively
target new customers.
Possible intermediate conclusion by
candidate: Geographic expansion po-
tential is limited and acquisition of new
customers seems expensive. In a next step,
I will therefore look at the current custo-
mers and further potential with them.
FURTHER POTENTIAL WITH CURRENT
CUSTOMERS
Figure 1 depicts the distribution of 2017 sales,
which sum up to ~€2.5B in total.
It is evident from the graphic that 25 of 550
customers, or about 5%, are making up 80% of
the sales of the company.
Those customers should therefore be the focus of
further analysis.
3
 Cumulated sales by customer (in % of total, 2017)

80%

01 03 05 07 09 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 Other
~550

Figure 1: Cumulated sales by customer

An interview with the management yielded that chasing both from the client. In a next step I would
Packagino is currently not systematically sharing like to better understand why that is the case.
leads and customer data between the two pro-
duct lines. It furthermore revealed that sales reps Customer interview results of top customers
(in % of respondents)
of one product line are not trained regarding
25 15
other product lines.
Only strap
16%
A study into the customer product purchasing B
Only strap
behavior of the top 25 customers yielded the Only stretch 47%
24%
data depicted in Figure 2. A significant share
of customers is evidently purchasing both pro-
duct groups, but only a small share of 20% is
purchasing both products from Packagino. Only stretch A
Both 33%
60%
It is evident that there is some untapped potential
in the other 80% of customers, since they might
Both
be interested in buying products from both lines. 20%

Do you need stretch Which products do you

Possible intermediate conclusion by candidate: and strap products? currently buy from our client?
Despite the fact that a lot of customers purchase Figure 2: Customer product requirements
both product lines, only a limited number is pur-

4
REASONS FOR LIMITED CROSS-SELLING
To better understand the issue from the custo-
mer point of view, a prior Bain team already
conducted two surveys with all 25 top custo-
mers. The results are shown below.
A significant number of customers, which are
currently only buying one product line, is una-
ware that the second line exists. Additionally,
half of current strap buyers and the majority of
current stretch buyers would consider buying
the other product line from Packagino.
The chart does not indicate whether customers
that already know both lines would consider
purchasing both in the future. For simplicity,
we shall assume that they decided against it.
An additional piece of information gathered
from the controlling team at Packagino is the
typical upselling amount for customers that
switch from one to two products:
• Customers that previously only bought strap
plastic generate ~50% additional revenue
• Customers that previously only bought
stretch products increase their revenue by
~20% when switching to purchasing both
product lines
Possible intermediate conclusion by
candidate: The preliminary studies suggest
that Packagino does not reach its cross-
selling potential fully. In a next step, it would
be interesting to evaluate what this potential
means in total revenue potential.

Customer interview results of top customers (in % of respondents using Customer interview results of top customers (in % of respondents using
both products but only buying stretch from our client) both products but only buying strap from our client)
5 4 7 4
A B
No
25%
No
No 50%
57%
No
80%

Yes
75%
Yes
Yes
50%
43%

Yes
20%

Do you know that our Would you be willing to also Do you know that our Would you be willing to also
client also offers strap? buy strap from our client? client also offers stretch? buy stretch from our client?

Figure 3: Interview with stretch buyers Figure 4: Interview with strap buyers

5
CALCULATION OF UPSIDE POTENTIAL FROM
TOP CUSTOMERS
To calculate the upside potential, we first have
to estimate the sales of the top 25 customers.
We know that the total revenue is ~€2.5B and
according to Figure 1, the top customers make
up ~80% of the total revenues, leading to a
current revenue of top customers of ~€2B.
The average top customer therefore generates
revenues of ~€80M (€2B/25). The number of
additional customers per product line is already
visible in Figure 3 and Figure 4. Therefore,
there are 2 current strap customers and 3 cur-
rent stretch customers, which might purchase
both lines from Packagino in the future.
The maximum additional potential from strap
customers would therefore be €80M (€80M
rev/customer * 2 customers * 50% upsell)
and further potential from stretch would be
€48M (€80M rev/customer * 3 customers *
20% upsell).
Scaling this potential uniformly to all custo-
mers, we can simply extrapolate to ~€160M
((€80M+€48M)/0.8).
[Note: If the candidate does not immediately rea-
lize that the total number of customers is visible in
the aforementioned figures, the calculation is still
possible by using the percentages in Figures 2 – 4]
6
Possible intermediate conclusion by candidate:
From a back-of-the-envelope calculation, we can
estimate an upsell potential of approximately
€160M by selling both our product lines to custo-
mers that are currently only purchasing one.
LIMITATIONS
Multiple constraints have to be kept in mind
with this approach. First, customers that are
“willing to buy” are not necessarily going to
buy from Packagino. Secondly, the organiza-
tion is currently not really set up to deal with
cross-selling, since the product lines do not
share data and customer representatives are
not trained accordingly. Finally yet impor-
tantly, the calculations are rough estimates
and have to be verified on an account-level.
Possible final conclusion candidate:
The key value driver for Packagino is the
upsell of product lines to existing customers.
An optimistic assessment yields about €160M
additional revenue potential. To realize this
potential, the company would have to inte-
grate the data between the two product lines
and train their sales representatives.
 UNDERSTAND SETTING
AND TASK
• Identify main goal of initial
question
• Delimitate different problem
areas
• Gather information neces-
sary to structure the problem
STRUCTURE SOLVE IN A
APPROACH STRUCTURED WAY
• Holistically structure the • Work through your initial
approach towards the case structure by category
solution based on initial
question (e.g. how to grow • Ensure that the interviewer
revenues) can follow your thoughts
and present interim results
• Define and sort problem
into broad categories you • Collect all data before
want to test (e.g. market, starting calculations
customers, etc.)
• Make sure that calculations
• Identify sub-questions that are in the right magnitude
help you understand and and seem plausible
solve for each category
(e.g. what is the competitive • Use assumptions when neces-
situation in the market) sary and document them
• Summarize your findings
after making sure that you
covered all relevant areas
7
IHR RECRUITINGKONTAKT

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