Project New York

Client Situation

As part of vendor assistance to a private equity client contemplating a divestiture, our objective was to determine the value of retail banking customers of a European bank.

A private equity fund wanted to exit an investment in the bank.
The stability of funding from customer deposits was a key factor in negotiating the sales price.
We needed to categorize the customers based on their historical activity.
In order to determine the expected future purchase price impact, we needed to predict customer volumes for each category at the deal closing date.

Approach

We developed and analyzed historic KPIs in collaboration with the target. We further predicted customer volumes by applying time series analyses in Alteryx.

We developed tailor-made KPIs for the characteristics of the target‘s customer portfolio, taking into account monthly account balances, deposits and other cash inflows.
Due to multiple individuals linked to multiple accounts, we had to develop a methodology to prevent double counting of customers in many-to-many relationships.
Using our categorization and monthly historical data, we conducted time series analyses based on autoregressive behavior (ARIMA) and exponential smoothing.

Value Impact

We developed a methodology that was instrumental to allocating a value to customers and which impacted the purchase price calculation.

We were able to forecast expected customer volumes in each category at the deal closing date. This allowed our client more certainty in negotiating a sales price that was within their target return range.

Our customer counting methodology solved a practical problem for the bank, they are still using it.