M&A STRATEGY DEFINED
Our M&A consultants work with companies to make mergers and acquisitions succeed and deliver superior returns by developing a repeatable model that is tied to the company’s strategy and customized to its experience. We help companies position themselves to take advantage of the global and domestic trends and competitor successes that are placing increasing pressure on them to grow.
Our analysis and years of experience indicate that M&A creates the most value when it is targeted and in line with a clear acquisition strategy. We have a repeatable model and institutional discipline to find, diligence and integrate companies.
The first strategic approach, which is closest to the company’s core competencies involves the search for “Highly Synergistic” acquisitions. An example of a highly synergistic acquisition target could be a competitor or a company that may or may not compete directly in the same geographic market, but is in the same business as they provide similar products or services to similar end markets and customers. When acquiring these companies, there are immediate synergies in terms of added customers and market share, reduced back office, and operational and purchasing efficiencies.
The next approach is “Strategic,” where the buyer seeks targets where synergies are evident, but require some work to achieve. Examples would include a target that has similar products, but sells to other end markets or a target that offers different products, but sells to the same end markets. While the cost synergies between the two companies are less significant, the potential revenue synergies and growth opportunities may be very high.
The next approach falls further away from the buyer’s core competencies, which is to seek “Complementary” acquisitions. These types of acquisitions may have some minor overlap in products, markets or capabilities, but do not provide any real synergy value. The synergies tend to be indirect and may involve sharing engineering resources and know how or operational best practices.
The final approach, is to seek out “Diversifying” transactions where the target company has no overlap whatsoever with the acquiring company. We sometimes meet companies that believe they should diversify their business through acquisition, but struggle to identify alternative industries of interest and related target companies. As you would expect, these types of acquisitions have the lowest probability of success, both in terms of finding and closing a transaction and in post-closing satisfaction.
The key to effective Strategic Acquisition Search is to pursue an acquisition strategy, such that when you approach a target company, the owner immediately understands the strategic benefits available through the business combination.
Here’s what we believe:
The gold standard of M&A is a repeatable model. Companies that work with us and built their growth on both organic and M&A achieved higher growth than the average.