Case Studies

Acquisition Search

Company Search and Valuation

Problem: A Chicago equity investment firm was interested in identifying successful EMS companies that had a consistent history of profit and a defensible market segment. The firm wanted to put together a syndicate of companies that could dominate low-to-medium volume and high complexity product assembly market niche within the industrial, medical and transportation market segments. So to better accelerate their time to market, the company retained NVR to provide intelligence, guidance and introductions to the most eligible companies that would make the best acquisition candidates.

Solution: NVR provided a macroeconomic analysis of the EMS industry of the leading suppliers profiling their profitability by industry segment, geography and customer product application. Because of the many years of experience NVR has had in the EMS sector, CEO-level access and introductions were made to a wide variety of eligible companies. NVR assisted the client in the market valuation of these selected firms, assessing their future potential and position in the marketplace, and making recommendations for the best companies to be successful.

Candidate Due Diligence

Problem: A public company had identified a private candidate firm for potential acquisition because of its high growth potential. However, the company to be acquired was active in printed circuit board contract manufacturing –a field not well known by the sponsor. As a result, NVR was hired to provide expert opinion and due diligence research services on behalf of the acquirer who wanted verification of the candidate’s position in the market, validification of the customer base and future business potential, evaluation of manufacturing efficiency, and an overall assessment of employee performance and business viability.

Solution: NVR successfully provided the acquirer with domestic and global market information on the contract manufacturing industry, the candidate’s position within it, its prospects for future growth (interviewing existing customer and determining future needs), and an independent and objective assessment of the strengths, weaknesses, opportunities and threats associated with the proposed acquisition.

Aerospace Partner Search

Problem: A major aerospace OEM was interested in acquiring one or more technology-rich sensor manufacturers to support its expanding product line. The OEM was not familiar with the structure of the sensor technology market, industry profitability, return on equity and assets, growth rates, competition and the rate of technology innovation. To this end, the OEM wanted to establish criteria by which to evaluate and rank potential acquisition candidates so that a target list could be drawn up and further inquiries made.

Solution: NVR provided a complete overview of the industry detailing leading sensor manufacturers, growth rates and logical segmentation by application area. Additionally, company profiles were constructed containing technological, market, financial, and customer analyses to allow the sponsor to evaluate selected candidates on a preliminary basis. Based on the results of NVR’s research effort, the client decided against pursuing acquisitions as the sensor industry did not provide the necessary synergies for technological integration, nor was there an adequate return on investment anticipated to warrant further investigation.

Benchmark Study

Manufacturing Benchmark Study

Problem: A large OEM manufacturer was interested in conducting a benchmark study of manufacturing performance producing printed circuit boards in-house versus independent contract manufacturing assemblers. The sponsor requested that 12 OEMs and 12 contract manufacturers be interviewed and bench-marked along the same criteria to obtain operational performance metrics which could be compared and analyzed.

Solution: NVR successfully completed all field interviews and provided a detailed analysis of manufacturing performance describing direct and indirect costs, average burden added for overhead costing, margins for service, design and labor, average board throughput rate, estimated defects per million, equipment mean-time to failure, unplanned down time, etc., providing some of the first independently obtained statistics for the industry. As a result, the sponsor was able to evaluate its own strengths and weaknesses as well as target some new performance objectives

Customer Satisfaction Studies

Problem: Many high performance companies need an annual customer satisfaction measurement study to anticipate future business and correct existing and emerging problems. Since it is known that customer satisfaction equates to customer loyalty and continued business, measuring customer satisfaction of a wide variety of criterion is critical to both manufacturing and service businesses worldwide.

Solution: NVR has developed and executed numerous customer satisfaction client studies from large and small OEM companies in a variety of industry sectors. These studies seeks to quantify, differentiate and offer statistical and qualitative analysis in the areas of overall and individual performance relating to quality, on-time delivery, supply chain management, program management, relationship and communications, responsiveness to problems, business procedures, flexibility, technical capabilities and total value of the service being provided for a given period. Most important, our studies can measure and rank quality and quantity of future orders, competitive impact and reasons for continued loyalty on

Business Development

New Business Identification Study

Problem: A telecommunications carrier was seeking a way to estimate total market demand for its new transmission service and target the largest eligible customers within a specific geographic territory. Additionally, the client wanted detailed company profile information on the ranking customer base using an objective criteria to predict demand for its services.

Solution: NVR provided research which ranked the top 100 eligible customers of the firm’s services in descending order. It was necessary to profile each prospect by total number of lines, sites, T-1 access, switch-type, budget, growth projections, planned T-1 lines for years 1-3 and sponsor name recognition in order to rank the relative strength of the customer. As a result of the information provided by NVR, the sponsor achieved a dramatic two-month payback on the project.

New Product Application Technology Study

Problem: A large aerospace company had developed a unique radar scanning technology that linked 64 separate processors into a single array (a SIMD array used for enemy missile surveillance) for high-reliability surveillance. As a considerable investment had been made in producing the product, the company wanted to determine the market potential for applying the technology in other compute-intensive applications or environments. Moreover, the company wanted assistance in the technology transfer that would result from acquisition, partnership or alliance.

Solution: NVR provided an in-depth assessment of the market potential for the high-speed computer array, and identified many new application areas that had not been previously recognized (for example, 3D medical imaging, weather simulation and information retrieval). A competitive evaluation was provided and a market forecast of when the product should be introduced was made. Additionally, eligible partners were identified who might acquire or enhance the basic technology.

Regional Market Study

Problem: A Northeastern EMS company was interested in better understanding the regional market for its services which included PCBA, box build integration and wire/harness and cable assembly. Because the client was a small and regional, it was concerned with the competition and the total available market (TAM) that existed within its specific geographic radius. Additionally, the company wanted to understand the demand for its services and the current penetration among OEM customers and what were the specific barriers to entry among competitors.

Solution: NVR provided a macroeconomic analysis of the EMS in North American and in the Northeastern region of the market. A profile of end use customers was provided including the total available market, leading competitors, operating margins, competitive niches, and areas of strongest potential. Recommendations were made as to where to concentrate sales efforts to achieve the maximum penetration, minimal price-sensitivity and preferences for small versus large suppliers. The client ultimately executed the strategies recommended by NVR and achieved a 2x market growth for each successive year.

Business Development

New Business Identification Study

Problem: A telecommunications carrier was seeking a way to estimate total market demand for its new transmission service and target the largest eligible customers within a specific geographic territory. Additionally, the client wanted detailed company profile information on the ranking customer base using an objective criteria to predict demand for its services.

Solution: NVR provided research which ranked the top 100 eligible customers of the firm’s services in descending order. It was necessary to profile each prospect by total number of lines, sites, T-1 access, switch-type, budget, growth projections, planned T-1 lines for years 1-3 and sponsor name recognition in order to rank the relative strength of the customer. As a result of the information provided by NVR, the sponsor achieved a dramatic two-month payback on the project.

New Product Application Technology Study

Problem: A large aerospace company had developed a unique radar scanning technology that linked 64 separate processors into a single array (a SIMD array used for enemy missile surveillance) for high-reliability surveillance. As a considerable investment had been made in producing the product, the company wanted to determine the market potential for applying the technology in other compute-intensive applications or environments. Moreover, the company wanted assistance in the technology transfer that would result from acquisition, partnership or alliance.

Solution: NVR provided an in-depth assessment of the market potential for the high-speed computer array, and identified many new application areas that had not been previously recognized (for example, 3D medical imaging, weather simulation and information retrieval). A competitive evaluation was provided and a market forecast of when the product should be introduced was made. Additionally, eligible partners were identified who might acquire or enhance the basic technology.

Regional Market Study

Problem: A Northeastern EMS company was interested in better understanding the regional market for its services which included PCBA, box build integration and wire/harness and cable assembly. Because the client was a small and regional, it was concerned with the competition and the total available market (TAM) that existed within its specific geographic radius. Additionally, the company wanted to understand the demand for its services and the current penetration among OEM customers and what were the specific barriers to entry among competitors.

Solution: NVR provided a macroeconomic analysis of the EMS in North American and in the Northeastern region of the market. A profile of end use customers was provided including the total available market, leading competitors, operating margins, competitive niches, and areas of strongest potential. Recommendations were made as to where to concentrate sales efforts to achieve the maximum penetration, minimal price-sensitivity and preferences for small versus large suppliers. The client ultimately executed the strategies recommended by NVR and achieved a 2x market growth for each successive year.

Buyer Preferences

Product/Feature Preference and Pricing Study

Problem: A leading manufacturer of color printers was interested in testing the acceptance of the features, price and performance of a new product that it had recently developed. Also, the company wanted to test the assumptions of its product deployment strategy to ensure that acceptance of the product was rapid and universal.

Solution: NVR conducted focus group interviews to evaluate the product features and performance of the new printer system, and to highlight any defects or issues which might impede customer acceptance. A variety of issues were addressed including price, performance, features, channels, service and maintenance. The information produced from the series of focus groups allowed the sponsor to refine its product strategy and to introduce the product successfully into the marketplace.

Contract Negotiation

OEMs Need Guidance When Engaging Contract Manufacture

Problem: A large OEM electronics manufacturer was encountering capacity problems with an exciting new product set to explode over the next few years. The company had no experience in outsourcing of its manufacturing and was in need of expertise to protect its assets involving technology transfer and to negotiate the best deal possible. It was unaware of the terms and conditions frequently encountered when engaging contract manufacturers or how to leverage its strengths during negotiation.

Solution: NVR has worked in the EMS (electronic manufacturing services) industry since 1993 and through its annual report on the industry (The Worldwide Contract Manufacturing Services Market) had many contacts and colleagues in the industry, thus was in a superior position to guide the negotiation process and protect its client’s interests. Over a period of four months, NVR consultants successfully coached the company on the various suppliers, including strengths and weaknesses, and largely drafted the contract between companies. The agreement included a forecast and order procedure, consignment procedures, pricing schedule, confidentiality, intellectual property rights, change control, warranties, termination and limits to liability.

Due Diligence

Company Valuation Study

Problem: A financial holding company was interested in acquiring an industrial manufacturer of gear and sprocket assemblies as part of expanding its portfolio of component suppliers. The candidate had projected some very aggressive growth projections with regard to its industry and the purchase price of the firm was largely dependent on these future earnings. As a result, the sponsor requested due diligence analysis services.

Solution: NVR conducted extensive research on the specific industry as well as other companies active in selling similar competitive products. The research demonstrated the historical and projected growth of all major industry participants and then compared this to the projections offered by the candidate firm. It was obvious that the projections and valuation of the firm were out of line with that of the historical industry, necessitating the sponsor to restructure its proposed offering. The conclusions of NVRs’ research effort saved the client literally millions

Medical Liability Evaluation

Problem: A large medical products manufacturer expressed its intent to acquire another medical firm whose product would complement its current portfolio. While the candidate firm produced a highly profitable and popular product, it also held the potential for long-term legal exposure through customer liability. The sponsoring company’s board wanted to be prudent and conduct an independent due diligence research effort as part of its oversight responsibility.

Solution: NVR’s research revealed that the potential long-term liabilities associated with the product were in fact short-term and highly risky, exposing the company to potentially significant damages. Field interview with physicians revealed strong reservations with regard to the continued use of the product, and exposed a growing body of plaintiffs and product liability lawsuits that would have a negative impact on acceptance of the company’s product. As a result of the findings, the sponsoring firm terminated the acquisition process, saving it (in hindsight), many millions of dollars in potential class-action lawsuits.

Flat Panel Feasibility Study

Problem: An equity investment company expressed interest in making an investment in a manufacturer of high brightness backlighting technology for the flat panel display (FPD) industry. The investment firm needed a background analysis of the demand and supply of FPDs, an understanding of the manufacturers of backlighting technology and the degree of competition, and an assessment of the competitive advantages provided by the candidate. Additionally, a growth forecast was required for the company by customer, trends in average selling prices, and projected revenues by product line.

Solution: NVR successfully provided the investment company with a complete assessment of the FPD industry and the market share of participants (including the candidates own position), as well as a competitive technology evaluation, an OEM customer assessment, and market growth forecasts—all of which enabled the firm to more accurately estimate the return on investment. Unexpectedly, NVR’s research indicated that a significant change in corporate management would be necessary to advance the company to the next stage of growth and that a sizable financial investment in terms of equipment and marketing would be necessary to capitalize on the strong demand for high brightness backlighting

Market Research

Worldwide Demand Study for Nanotechnology Product

Problem: A high technology test and measurement company was interested in developing the next generation to its nanotechnology product. The company wanted to interview its leading customers to determine their current and future measurement needs and product performance requirements. In addition, the company wanted to determine where it stood among the competition and what the future potential was for product sales.

Solution: NVR successfully conducted approximately 40 field interviews of existing and potential customers to ascertain their measurement needs, competition solutions, existing product deficiencies and future expectations and performance requirements. As a result of the field research, NVR was able to give specific performance expectations for the next generation product, quantify the installed base, measure market share and opinion on customer and competitive systems, and to estimate the future demand for measurement system over the next five years.

Market Position and Pricing Analysis

Problem: A semiconductor manufacturer was interested in verifying the market share and competitive position for a specialized chip as well as assessing the relative strengths and weaknesses relative of its features. The company also wanted to know how best to position the product to take advantage of expanding customer demand, as well as gain an understanding of the key performance features needed to capitalize on new product applications.

Solution: NVR was able to accurately quantify the current and past market growth by user segment and forecast future consumption based on existing and emerging product applications. A detailed pricing analysis was also performed showing how the competition had used a continuous low-cost strategy to capture market share. An assessment of end-use customers helped to identify key features in the selection of a competitive chip, and to determine how the company must provide an equal or better performance to ensure renewed growth in the marketplace. With the information provided, the sponsor was able to successfully re-position its chip product and design a new product development strategy to recover market leadership

Worldwide Product Application Study

Problem: A large manufacturer of laser-based, displacement/position sensor and systems was interested in quantifying the worldwide potential for its latest product in a variety of different end-use applications. Additionally, the company was interested in understanding the technological status of its product compared to the direct and indirect alternatives, in order to ascertain how its product would fare in the open marketplace.

Solution: NVR provided a comprehensive research study that analyzed the geographic market (US, Europe, Japan, Pacific Rim, etc.) as well as the product application area (automotive, aerospace, machine tool, steel, textiles, etc.). Within each of these segments, an in-depth analysis of competition, future product applications, economic outlook, and end-user requirements was provided. Product and market recommendations were also offered to strengthen the company’s position. As a result of NVR’s research, the sponsor was able to maximize its marketing resources and develop a focused target-market strategy for product deployment as well as optimize the product feature configuration to meet end user

Worldwide Market Demand Study

Problem: A large OEM manufacturer of printed circuit boards and inline memory arrays was interested in getting industry feedback and product intelligence on select the highest growth markets for its products in order to maximize its marketing and sales efforts. In particular, the company wanted to understand the kind and size of customers that were manufacturing printed circuit boards and memory arrays and the product applications in order to target them for future business development.

Solution: NVR provided a series of profiles on leading high-growth market segments in the telecommunications, computer and consumer industries, providing industry growth rates, market share and product application segmentation. OEM customers were ranked competitively by size and other variables so to allow the sponsor to focus on the prime target candidates for their sales force efforts.

New Product Launch

New Technology Market Assessment

Problem: A high technology test and measurement company was interested in ascertaining the potential demand for an advanced welding technology for the aerospace and automotive industries. The company had invested considerable R&D into a new performance welding technique that had the potential for providing substantial savings, replacing competitive systems and offering substantial performance benefits if adopted. The company wanted to understand the estimated adoption rate, competitive solutions and future potential of the proposed technology in order to determine future R&D spending.

Solution: NVR conducted approximately worldwide 40 interviews of aerospace and automotive OEMs to understand their current and emerging welding needs and applications. As a result of the field research, NVR was able to analyze the competitive welding environment, cost-benefits, and overall adoption rates for current and emerging technologies in these sectors. The research provided to the client ultimately led to the decision that the demand for its technology was not significant enough to warrant the continued levels of investment to obtain a supportable ROI and subsequently suspended the R&D program.

Advanced Microprocessor Study

Problem: A major semiconductor manufacturer of RISC-processor chips needed to better understand the current and projected consumption of RISC (CPU and MPU) processors by product and application area within the embedded electronics marketplace. NVRC was commissioned to provide a macro-economic analysis of the historic and future market for current and planned RISC devices, segmented by industry application (computer, communications, consumer, etc.) and by market share and leading competitor.

Solution: NVR supplied a summary matrix of the embedded marketplace was provided by supplier (Intel, Motorola, MIPS, etc.) and application area (ex. laser engines, consumer games, video displays, etc.) in terms of units, revenues and average selling price. Moreover, a forecast was provided by vendor and application area based on the competitive strengths of the existing and planned architectures in contrast with relative competitive positions of suppliers in the marketplace. As a result, the sponsor was able to successfully target the most attractive application with the least penetration from the findings in this assignment.

Outsourcing Studies

Rationalizing of Manufacturing Operations

Problem: A major telecom OEM was interested in rationalizing its manufacturing operations with regard to outsourcing. Because the company’s manufacturing investments were quite extensive, and the political and cultural institutions resistant to change, it was necessary to develop a method by which each facility could be objectively compared and scored based on a variety of key criteria such as cost, efficiency, productivity, competitiveness, investment intensity, maturity of technology, complexity of assemblies built, time-to-market concerns, profitability trends, supply chain management tools.

Solution: NVR developed an analytic method to objectively compare and rank the manufacturing operations and determine those facilities that were core to its operation and those that were better suited to outsourcing with external manufacturers. A unique criterion was tested and applied that ranked the relevant features important to the client’s core competencies allowing each facility to be scored appropriately. Upon conclusion, a divestment strategy was developed for those facilities suitable for outsourcing that included bundling options and a process for overall

Selection of China Manufacturing Partner

Problem: A U.S.-based contract manufacturer was interested in identifying and partnering with a low-cost EMS supplier in China. The company was unfamiliar with the available pool of suppliers in Asia, their business ethics, capabilities, and how to go about identifying, qualifying and negotiating with the best potential partner. To expedite their decision-making process, the company retained NVR to provide competitive intelligence and profiles of the most qualified candidates and assist them in the selection process.

Solution: NVR began by providing a summary of the entire EMS industry in China and profiling the leading suppliers by region. Because the company had specific criterions of performance and capability that matched its own internal abilities, profiles of each companies operations were provided to assist in finding the best manufacturing match. Through an iterative process, NVR ultimately provided a short list of the best candidates that matched the client’s production and philosophical needs so that a more in-depth relationship could begin.

Selection of Low-Cost Manufacturing Partner

Problem: A European-based OEM was interested in identifying a low-cost manufacturing partner in the regions of Asia, Eastern Europe and Mexico. In order to remain competitive, the supplier needed the manufacturing capabilities of electronics EMS/ODM partner/suppliers in each region to maintain its competitive position in the end use appliance markets. The objective of the project was to identify the best potential manufacturer in each region for geographic region for eligible partnership.

Solutions: NVR provided a summary of the entire EMS industry on a geographic basis which included profiling all the leading suppliers by region. The client had specific performance and capability requirements by product that needed to be matched the available supply market and so a matrix analysis was provided for each region. NVR ultimately made recommendations and introductions to the leading candidates and assisted the client in developing a selection criterion for the best partner based on its internal needs, capabilities and outsourcing requirements.

Sale of Company

Contract Electronics Manufacturer

Problem: A contract manufacturer was interested in selling its business to a larger firm but was unfamiliar with how to identify a suitable buyer that would appreciate its strengths, customers and assets. The company had developed a specific niche in the high-mix, low-volume board assembly business and was very experienced in complex test procedures for advance memory components and other ICs. The customer base was expanding rapidly but the company had not realized the growth in business that would be accomplished over the next two years.

Solution: NVR developed a search process which profiled and screened a set of aggressive potential acquirers, and then made the initial inquiries and introductions on the seller’s behalf. NVR successfully positioned the client before a smaller set of qualified candidates who were interested in the customer set and technical capabilities and assisted in-depth negotiations to evaluate the core business and strategic assets of the seller. A bidding situation resulted among multiple buyers which allowed the seller to realize the best price for its business and resulted in a successful merger for both parties.

Company Wants to Be Acquired

Problem: A contract manufacturer was interested in being acquired by a larger entity. The sellers were struggling with problems of cash flow, capital investment and management’s ability to take the firm to the next level but were in a very desirable region and had excellent customers. Because of the client’s niche in the high complexity/ low-to-medium volume manufacturing market sector, NVR was retained to help identity, qualify, and negotiation the best deal and terms.

Solution: As a result of NVR’s extensive reach in the EMS market, it was able to identify and introduce the leading acquirers of emerging firms in the client’s vertical niche. A long and short list of leading acquirers and their strengths and weaknesses was provided to the client that gave visibility and guidance as to the best parent candidates. NVR further assisted management in selecting the best partners by negotiating the best terms as a result of providing industry comparables and historical buying behavior of similar companies.

White Papers

Flexible Machine Tool Trends and Technologies

Problem: A government entity wanted to release public a technology white paper assessing the impact of new sensor technologies on the flexible machine tool industry. (Flexible or ‘intelligent’ machine tool manufacturing is being seen as a major innovating force with regard to automotive, aerospace and the process control industries.) The sponsor wanted readers of the report to understand the latest state-of-the-art technology, its impact on the growth of the machine tool industry and related products.

Solution: NVR provide research on intelligent machine tools that profiled the industry from a demand and supply perspective, and gave a technological assessment of the latest tooling methods (laser scanning for reverse engineering, 3D contact probes, non-contact, in-process gauging, wear sensing, in-process calibration and part positioning, fault isolation diagnostics with expert systems, etc.). Recommendations were also provided as to where to focus technology investment and R&D dollars to yield the highest productivity gains.

Major Trends in Electronics Supply Chain Integrati

The concept of ‘supply chain management’ (SCM) is at once a misnomer. The managing of parts, assembly and product distribution has never been a ‘chain’ in the sense of linear and continuous links; rather, it is a ‘network’ of non-linear relationships and alliances between companies sharing a common vision. This paper explores the idea that the optimizing of supply relationships can be most efficiently achieved through outsourcing to value-added suppliers who bring world-class capabilities in SCM integration. As such, practical experience is every bit as critical to producing a value-added SCM solution as innovative software packages that require extensive time and capital investment. The two are not mutually exclusive, but supply chain integrators are in a superior position to optimize SCM solutions for an industry that is increasingly moving toward an outsourced production model.

SCM has been used to describe practically everything in manufacturing from discrete tasks to enterprise-wide solutions. However, SCM is actually composed of six basic applications: supply-based management, in-bound logistics, assembly, fulfillment, outbound logistics and distribution/product support. In this white paper, we will concentrate on understanding how an effective supply chain integrator can streamline these elements to achieve significant economies of scale and production efficiencies for OEM manufacturers interested in concentrating on the more relevant, core activities of research, product development and marketing.