COMMERCIAL RISK ASSESSMENT OF A
LARGE SIZE EDUCATION COMPANY WITH PAN-INDIA PRESENCE



Client

Narayana Educational
Institutions

Our role

Commercial due
diligence


CONTEXT

Morgan Stanley was looking to invest in Narayana Group, a chain of educational institutes having sizeable operations from KG to 12 including Test preparation Centres. The group has more than 3 lakh students with a pan India presence.Before finalizing the investment Morgan Stanley wanted to do a commercial risk assessment associated with the current business practices of the group.

LOESTRO’S ROLE

Morgan Stanley engaged Loestro to do an assessment of the business operations in order to identify potential risks arising due to current practices.Given our operating and strategic experience in the education sector we were rightly placed to evaluate commercial risk associated with the business.

OUR APPROACH

Loestro team followed a structured approach to identify the commercial risks and recommend the action plan to mitigate the same.

1. Our Team Conducted a comprehensive 360 degree primary research to understand the current business practices. This included :

    • Discussions with senior management
    • In-Depth Interviews of business practices from operations team
    • Interviews with center heads
    • Parent, Sudent and Staff Surveys
    • Mystery Shopping and First Hand experience of the practices

2.  We benchmarked the business practices of the target with Industry standards

    • Discussions and evaluation of business practices of other leading operators
    • Secondary research on best practices
    • In depth interviews with experts for benchmarking

3.  We synthesized the data to articulate the gaps and suggested mitigation strategies

    • Triangulated data from multipe sources and and conducted Gap Analysis between the benchmarks and the target’s practice
    • Created a mitigation strategy with action plans, defined timelines and ownership

IMPACT

Management team acknowledged the problems and immediately startedi mplementing the suggested action plan.The study and the action plan gave confidence to Morgan Stanley,resulting in the closure of the deal valuing to more than $70Mn