Enhanced Investment Perspectives –
We have served as a trusted advisor across the asset landscape and investment lifecycle on the strategic implications of pursuing investment opportunities.
Security Carve Out
Hedge Fund Case:
Investment Due Diligence On Semiconductor/R&D Leader
A leading hedge fund was seeking to invest $1B into the public equity of a Fortune 500 semiconductor and R&D leader.
Engagement Overview and Impact
Red Chalk Group was engaged to validate and augment an investment thesis hinging on continued “above market” profitability owing to superior innovation, R&D, and licensing activities. Key questions included level of innovation, the impact of an evolving telecommunications ecosystem, and defensibility of a historically successful business model.
- We conducted market and target due diligence to prove out the thesis that the target was innovating at a pace greater than most industry peers, who were unable to compete on core semiconductor and mobile-related R&D.
- Moreover, we conducted over 35 industry interviews with leaders across the value chain including former CXOs, corporate VC executives, engineering executives, and IP/licensing leaders that collectively had intimate knowledge of industry dynamics, trends, and the likely scenarios going forward.
- We confirmed limited existential threat to the core “profit engine” of the target, instead, pointing to a long-term scenario in which increased innovation and R&D reliance would be likely while identifying key risks and opportunities including IoT and 5G.