Which Customers is the Target Serving?
This chapter deals with six special cases that are often the subject of Commercial due diligence (CDD). They are: New technologies, Diversification, New business models, Joint ventures (JVs) and strategic alliances, Declining industries, Recovery plays. The chapter focuses on each of these in turn, discussing how CDD needs to be adapted and what it should be looking out for. Innovation must deliver benefits that consumers actually care about. Property rights give a legal basis for enjoying the benefits of innovation, although their effectiveness depends on how easy it is for imitators to get round the protection they give. CDD in declining industries is all about the assessment of islands of demand where differentiation is still possible. In a recovery situation, CDD needs first to understand the reasons for the target's collapse and then assess the chances of a sustained recovery. As with CDD generally, the chances of recovery will depend on market attractiveness and the target's ability to compete.