Operational Insights
Why market structure should sit next to the financial model
A forecast is an opinion about a market. Concentration, pricing power, and demand are the facts that make that opinion hold — or not.
8 min
The issue
Most models used in mid-market deals and growth plans have an implicit market view and no explicit one. Volume grows because it grew. Price holds because it held. That is a time series with a story attached.
Why it matters
How concentrated is the industry, and on which side of the table? What is the HHI doing? Who has pricing power — the company, the customer, or the channel? Those questions change the model. A company in a concentrated customer market does not get to keep the year-three price increase.
What management should examine
Structure, concentration, share, pricing power, demand drivers, and the two or three scenarios that would invalidate the investment or the expansion. Operators already feel this: “we cannot get price,” “a new competitor showed up in our two best territories.” Those are market-structure events, not execution problems.
A practical approach
The work is not an eighty-page industry primer. It is a short quantitative view, then a model rebuilt to be consistent with it — or a decision that changes. Meridian does this as analysis, not as antitrust legal advice and not as a commercial-due-diligence product.
Key takeaway
If the market in the CIM and the market in the building are different, the forecast is a hope. Put structure next to the model before you staff the plan.
Has anyone tested the market your model assumes?
Related pillar: Market Intelligence, Applied Economics and Research