Proprietary deal flow
Private equity

Industry screen by Arthur D. Little into a niche market segment delivers 5 proprietary acquisition targets


The client was a start-up private-equity firm seeking proprietary, non-competitive deals in the functional-foods industry, representing foods with healthy ingredients for more nutritional value. 


With multiple overlapping segments, the functional-foods industry is not clearly defined and extremely large (over  USD 25 billion in the US market alone). 


In addition, the industry has been widely approached by private-equity firms, making non-competitive deal flow extremely difficult. Private-equity firms are seeking the next big trend when it comes to health-conscious consumers.


The Arthur D. Little team proposed a three-phase approach, including an industry primer, segment profiles, and target-company profiles. 

The team presented the background research and worked with the client to identify segments that were in alignment with its investment characteristics.

In addition, a database of privately held companies was created and filtered by size, segment, and other criteria to create a targeted list of potential acquisition candidates. 


The Arthur D. Little team activity included:

  • Creation of an industry segmentation structure covering 24 niche areas
  • Identification of trends and key success factors for the entire industry
  • Creation of a database of over 2,500 privately held companies, with basic financial data
  • Segment profiles with market size, key players, growth drivers, trends, risk factors, and overall-attractiveness ratings
  • Profiles of over a dozen targeted companies in attractive segments that met acquisition criteria
  • Initial phone screening of potential acquisition candidates


By using a structured approach to industry screening, the client was able to identify targeted niche segments and potential acquisition candidates within 5 weeks after engaging the Arthur D. Little team.