Case Study: Commercial Due Diligence, Cleantech
Our client wanted to evaluate an investment in a Chinese environmental engineering company.

Case Study: Commercial Due Diligence, Cleantech
Our client wanted to evaluate an investment in a Chinese environmental engineering company.
Situation
- China focused private equity firm evaluating investment in a Chinese engineering company providing clean coal technologies (the ‘Target’).
- Target seeking funds to commercialize IPR-protected technology.
- Success depended on ability to compete with dominant technology which already had a 91% market share.
- An individual involved in the development of the Target’s technology was offering competing solutions raising questions about the value of the Target’s IPR.
Approach
Identified key issues, including:
- Industry and market segment attractiveness
- Competitiveness of Target’s technology
- Suitability of strategy
- Achievability of financial forecast
- Ability to enforce IPR
Our research and analysis included:
- In-depth management interviews and site visits.
- Interviews all along the Target’s value chain to obtain exclusive information.
- Interviews and discussions with independent industry experts and influencers.
- Detailed analysis of expected customer acceptance of the Target’s offering.
- Obtaining expert estimates about future end-user compliance with emission guidelines (key driver of demand).
- Analysis of government and industry statistics.
- Creating financial forecast based on realistic assumptions to support the client’s return analysis.
Result
- Analysis revealed that the dominant technology was more competitive in an environment of low compliance with environmental regulations.
- We concluded that stricter enforcement would significantly increase the competitiveness of the Target’s technology due to lower total cost.
- Recommended Target to initiate IPR infringement case which it later won
- The client invested in the Target at a favorable entry multiple.
- The Target – now the market leader in its niche – is on track for a domestic IPO.
Team member comment:
“Given that the technology was unproven, investigating customer acceptance was key. The fact that customer acceptance depended on so many different variables made this a challenge. For example, a power plant operator burning high-sulfur content coal would benefit more from using the Target’s technology than an operator burning low sulfur coal. There was a whole range of these variables, some more easily quantifiable than others. In the end, a combination of interviews with existing and potential customers and analyzing total cost of ownership gave us the answer.”
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