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Consumer Goods & ServicesCommercial Due Diligence on a B2C Rental Company


“Different Models Based on Contract Type and Customer Segment”
Consumers can access products without outright purchase, either in full or via installments, by opting for rental models that grant usage rights. For instance, when renting a car, users typically pay daily or monthly rates and return the vehicle upon contract expiration. Conversely, small household appliances like water purifiers or air purifiers often involve a long-term contract (3-5 years), after which ownership may transfer to the customer. Rental structures that require returning the product at the end of the contract are considered “return-type rentals,” while models that grant ownership after a certain usage period are “ownership-transfer rentals.”

These distinctions reflect differences in contract terms. There are also variations based on customer type: B2C rentals cater to general consumers with products such as water purifiers, air purifiers, and massage chairs, while B2B rentals target businesses with industrial machinery or IT/OA equipment. Automotive rentals serve both B2C and B2B segments extensively.

“Due Diligence on a B2C Rental Company”
Looxent conducted a Commercial Due Diligence (CDD) for a B2C rental company primarily serving consumers (and some B2B clients) by providing environmental/health appliances, kitchen appliances, home electronics, and furniture. Market positioning for rental companies often relies on account volume, and the target company—a mid-tier affiliate of a large conglomerate—holds a moderate industry standing based on the number of rental accounts.

The domestic B2C rental market features multiple competitors, including pioneering firms that initially shaped the household appliance rental model. Water purifiers, for example, are now ubiquitous in most households. Within this context, three key questions guided the CDD:

  1. Can the domestic rental market sustain growth?
  2. What core competitive strengths differentiate this mid-tier target company?
  3. How can the company’s growth be accelerated post-acquisition to enhance enterprise value?

“Assessing Additional Growth Potential in Domestic B2C Rental”
Looxent evaluated the domestic B2C rental market’s growth potential. We identified positive macro trends, such as evolving consumer purchasing behavior, as well as near-term drivers like category expansion and the rise of single-person households. While not explosive, the B2C rental industry is expected to maintain stable growth exceeding GDP growth rates and exhibit resilience against economic fluctuations.

“Analyzing Competitive Dynamics for Opportunities and Threats”
There are roughly 10 major B2C rental providers in the domestic market. Understanding how competition might evolve and its impact on the target company was central to the analysis. Looxent categorized competitor types, projected their strategic directions, and confirmed that growth opportunities remain available—even for mid-tier players like the target company.

“Evaluating the Target’s Business Model Competitiveness”
After analyzing market opportunities and competitive landscapes, Looxent examined whether the target company could capitalize on these openings. We defined future market evolution scenarios, identified key success factors, and assessed whether the target company currently possesses or can acquire the necessary capabilities. This process also highlighted areas where the target would need bolstering post-acquisition.

“Developing Growth Strategies and Risk Mitigation Approaches”
Integrating insights into market opportunities and the target’s differentiating strengths, Looxent proposed growth strategies for enhancing value post-acquisition. We outlined necessary PMI (Post-Merger Integration) initiatives and set priorities for execution. Additionally, we identified risk factors arising from changing channel structures and shifting consumer behaviors, evaluating the target company’s preparedness and responsiveness.

While the domestic B2C rental market may initially appear saturated, opportunities remain. By evolving the business model in line with market changes, companies can still increase enterprise value.



 



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LOOXENT

A  21F. Parc.1 Tower2, 108, Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea 07335

T  02-546-8222      F  02-546-8226

E  service@looxent.com 

© 2024 LOOXENT. ALL RIGHTS RESERVED.