Syncing Upstream Success with End Customers via Chemistry
This week, my team and I finally completed a "marathon" RFP process for an SEA national company. Although the process may still be way simpler than an RFP for a Chinese SOE, its duration certainly landed at the high end of typical duration of an RFP. It started at the end of November (a weekend after I submitted my first NBO) and officially ended this past Wednesday (Mar 14). From high level, we circulated 2 pre-RFP, 1 RFP, 1 follow-up, and 1 Bake-off presentations to the client, with no surprise that the final # of pages is almost on par with an OC, though definitely much visually appealing than the dull-looking OC pages. What I want to focus here is not really the content of the RFP per se, but the process and the consideration that are naturally built-in for the final product.
What made this RFP very interesting is that we created lots of customized pages, although there are still several sections that are standard RFP pages. These customized pages allow a certain level of flexibility and require some thinking. The main guidance is from the client's email, usually well-worded and drafted (typical for SOEs), and my seniors will give a bit thinking on how to address those questions with slides.
In short, the list of topics that have come across in all the decks include: our creds (regional+client-related, industry-wise, transaction team), the company's strategic review (roadmap plus some consulting work), selection of potential acquisition targets (overview of the companies with each's profiles, and general sub-sector analysis of their fitness with our client's portfolio, plus actionability, which is also key to the actual execution success), chemicals sector market update, and lastly, overview of how the execution process will be like. This set of arrangement is comprehensive enough to allow the client to understand not only the quality of the bank per se, but also its commitment and interest to this specific task. I think we have mastered it all, but if I have to give a numeric assessment on how we fair on these topics, below is what I have in mind about each sections and how we do.
Creds: 4/5
Company strategic review: 4.5/5
Targets overview: 5/5
Chemicals market update: 5/5
Execution overview: 5/5
What could be easily concluded from the above assessment is that we might be a bit short of having the perfect chemicals creds in Asia or to provide very technical analysis on the client's portfolio. Good thing is that there are probably no banks in Asia that is fully capable of doing this, largely due to the fact that chemicals has been less a "popular" sector for transactions in the past and it may just become the focus in recent years. The other sections, to be honest, are exercised nearly perfectly by us, not only from sweat perspective, but also from intelligence and the thoughts that we have put in, and finally the presentability of the sections as well --- all are nearly perfect.
Of course, the same 5 sections listed above may be used again for some other buy-side RFPs in the future, but I think the most flexible and interesting sections are the company's strategic review and the target selection sections. These are the "money" sections that demand the most thoughts, but ironically, these are the sections where most of the work are consulting-style. I think I should spend more time focusing on these 2 sections from now as they have the most "meat," at least from what I see.
The strategic review started with an overview of all the projects of the company, and a financial update on how the company has improved financially in the past several years. From there, we examined the value chain that is at the core of any chemicals company, and identified the areas where the company could consider to have the targets to complement after the acquisition. This process, as it might not be very surprised to many, is a bit like reverse-engineering, but I think we did a pretty good job reconciling objectivity with subjectivity in this specific case. After the close examination of the missing elements in the company's portfolio, we moved to present the general market updates on these identified sectors, which then leads to the overview of the potential targets that could be fitting for these identified areas of growth. The work is really comprehensive and inclusive of all the potential targets, not just the good ones we think, but also the ones that will be less fitting. In total, more than 30 companies might have examined by us, and we shortlisted half which is also assessed on its strategic fit, management quality, Asia exposure, etc. This approach is perfectly in line with the the term "scope study," which is exactly what our client wants.
The potential targets overview could not be accomplished without the help of our global colleagues, who helped nominate the names that we could bring our clients to consider. Of course, given the time and resources, we could not dig deeper into each target and provide a technical analysis on the fitness or the complementary analysis between the target and our client; nonetheless, we have complicated the process a bit to incorporate our subjectivity in filtering out the targets, and showed the process and the consideration in the RFP to our clients as well. It is important to show the work we done, not just what we conclude. It could be a simple as giving 2 names to the client, but our value-adding part is to complicate this process and provide the back-up thinking and alternatives to the client.
To conclude, this marathon RFP process helps me dig deeper into some core areas of the pitching, and understand the value that an investment bank could add to our client, and how we could use presentations to show that. The past 4-5 months with this task is rewarding for me for many reasons, and finger crossed if we could secure the mandate eventually.