Due Diligence Homework: Key Issues to Watch For

Examples of the types of direct marketers who’ve already used these models:

• A direct marketer trying to optimize marketing spending (and P&L) across its selling programs, by modeling sales from catalogs, space ads, PIPs, the Web site, etc.

• An equity house acquiring a catalog business, which sought to define profitability from customers and prospects. This modeling was used to define cash flow financing required for a variety of growth rates and ROI. This became the forecast used in both valuation and the successful presentations to potential financing debt sources.