Private Equity Due Diligence for a Mobile Identity Transaction


The Challenge

How can private equity investors and corporate buyers in digital identity drive deal value and mitigate risks across the M&A lifecycle?

A group of private equity investors were assessing the prospective investment in a mobile identity and device intelligence company. As part of the due diligence process, the investor group sought a more in-depth comprehension of communication platforms as a service (CPaaS), the digital identity landscape, the competitive outlook for mobile intelligence players, and the operational performance of the target company. Liminal was engaged to provide operational, technical, and commercial due diligence of the target and to inform our client with relevant growth trends that could impact their decision-making process.

The Action

Over the course of the engagement, Liminal collaborated with the private equity team across three main areas:

  • Market Due Diligence
  • Operational Due Diligence
  • Technical Due Diligence
Market Due Diligence

The current growth of the mobile identity and device intelligence is driven by the proliferation of digital services, the consequent rise of cybersecurity threats, and the continued adoption of mobile devices as the dominant vehicle for internet traffic. As the market for CPaaS and mobile identity grow (at a CAGR of 18% and 15% by 2023* respectively), consumers also expect secure and seamless experiences throughout the digital identity lifecycle, from account creation and proofing to authentication. 

As part of its market dynamics research, the Liminal team generated an addressable market map with attractiveness criteria to determine the target’s ability to compete in established markets. The analysis also included an evaluation of barriers to entry and disruptive market risks driven by institutional market players, evolving regulations, and identity-focused standards bodies.

Operational Due Diligence

To help our client better assess the target’s performance and future potential across defined use cases, our team performed a deep-dive assessment of the target’s business model, cost drivers, and operational improvement potential. From a future-centric perspective, our team assessed the viability of the target’s product development roadmap and risks associated with proposed go-to-market strategies.

Leveraging the Liminal Expert Network, an experienced and dedicated team of advisors and industry leaders, our team performed Voice of the Customer interviews to establish purchase criteria, user sentiment, product stickiness, and addressable product gaps. 

Based on the outcomes of both independent analysis and user sentiment, Liminal concluded its operational due diligence to evaluate the target’s product portfolio and performance against key competitors. The Liminal team concluded its operational due diligence with an evaluation of the levels of investment required to maintain and scale solutions in accordance with the target’s product roadmap and development plans.

Technical Due Diligence

To evaluate the target’s position in a comprehensive tech stack, our team evaluated the supply and demand economics of the company’s data elements and conducted additional market segment analysis for additional applications of their proprietary data sets. Additionally, Liminal evaluated the target’s core platform and proprietary technology to highlight technical differentiators including traffic pattern recognition, machine learning, data pipes, and APIs/SDKs. Our team also extended technical due diligence to identity governance and cybersecurity strategy, assessing the impact of an external threat and the target’s data protection program in accordance with GDPR and CCPA regulations.

The Outcome

The Liminal team worked collaboratively with our client to evaluate the deal opportunity, creating an investment thesis supported by a post-acquisition go-to-market roadmap. As part of its overall analysis, Liminal established six opportunity growth areas including banking, healthcare, and gaming. As a result of our team’s in-depth market intelligence and business and operational analysis on the target company, our client was able to validate key underlying assumptions of the investment thesis which helped inform a final investment decision to place a competitive bid for acquisition.

* Please note that Liminal calculates projections based on the specifics of each engagement, which may not be representative of the market at large.

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