Structuring a new market expansion partnership deal.

September 16, 2019 | Client Success Story

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Structuring a new market expansion partnership deal.

How we helped a contracting company structure a partnership deal for a new market expansion.

A small contractor was looking to expand into a new geographical market. The company looked to ally itself with a local market partner but needed advice on how to structure and negotiate a winning deal. The contractor turned to GravityThink for help.


ICE Contracting, a privately-owned construction company, was looking to expand into a new market. The market, an emerging African country, looked promising and had great potential. The owners identified a local industry professional as a great potential partner. The local partner would use his experience and contact network to help the company with sales and growth.

As negotiations between the two parties took off, our client needed better insights into the opportunity and expected return profile.They also looked for guidance on how to approach the deal, how to structure the equity split, and the role to be played by each partner.

The main questions ICE was looking to answer:

  • Opportunity outlook and potential.
  • Company financial performance and expected return profile.
  • Pre-money valuation and recommended equity arrangement terms.


We first explored the overall market opportunity. Our team analyzed economic drivers, key industries, and growth prospects. We also examined our client’s competitive advantage and how they could leverage their strengths in this new market.

GravityThink compiled data on costs, pricing practices, and working capital needs based on market surveys and interviews. Next, we built a financial model to forecast our client’s performance. The model covered different possible revenue scenarios, capital structures, and equity arrangements.

We also estimated the company’s valuation using a discounted cash flow model. The opportunity looked promising, with above average net present value (NPV) and IRR return rate. The investment presented a very attractive return potential to our client.

We built a three options framework to advise the client on how best to structure its services and acceptable equity split scenarios. Our recommendation covered: cash and asset contributions, salaries, equity splits and vesting periods, and internal share repurchase rules.

Lastly, we used our findings to advise our client on how to approach the deal, what terms to negotiate for, and what kind of equity arrangement would be most beneficial to both parties.


Our client now had a clear understanding of the opportunity and was well-positioned to take advantage of it. ICE was able to confidently negotiate a deal that maximized its returns and minimized overall risk. The local partner was also satisfied with the arrangement. The new partnership deal ensures a strong foundation for future growth and success in the new market.