Tag Archives: m&a

What’s Your M&A End-State Vision?

Having a shared vision of the end-state of an merger or acquisition is required for the successful realization of the original deal thesis and value to be gained from the business combination – a Critical Success Factor. In our work, what we find is the end-state vision can be portrayed by a simple picture. This picture drives alignment among senior executives, investors, and the numerous stakeholders in the transaction and integration of two enterprises.

Below is an illustration of the alternate end-states two firms can adopt and use for various purposes inclusive of integration planning and execution.

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Standalone Model

  • Holding company
  • Decentralized governance
  • Loosely coupled coordination
  • Few shared resources and capabilities
  • Synergy Model

Strategic business units

  • Cross-selling
  • Cost reduction
  • Shared services
  • Balance sheet combination

Consumption Model

  • Combined product lines, market segments, and channels
  • Integrated technologies and intellectual assets
  • Single operations and infrastructure
  • One entity and governance structure

Transformation Model

  • New lines of combined business
  • New value propositions
  • New industries
  • Integrated core competencies
  • Step beyond the obvious

In the most extreme end-state, a transformed business combination, the new enterprise need not undertake all integration challenges in one move. A direct line between the pre-transaction firms and transformation does not have to be the only pathway. Senior executives and governing boards might select a progression of strategic integration moves. For example, the transformation can be achieved through a roadmap such as:

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Multiple paths exist for achieving the end-state vision of new business combinations. Whether moving directly from the pre-transaction state to the ultimate business structure or selecting a series of strategic integration moves depends on the optimization of several variables such as:

  1. Financial goal
  2. Value drivers
  3. Market opportunities
  4. Speed requirements
  5. Risk tolerance
  6. Cultural differences
  7. Change capability
  8. And others

When considering potential mergers and acquisitions, what is your end-state vision? What are your strategic integration moves to realize that vision? Will these moves realize your deal thesis for value creation?