Reaping the Benefits of Mergers and Acquisitions: In Search of the Golden Fleece
Helpful whether you are a novice at the merger game or an expert.
TABLE OF CONTENTS Reaping the Benefits of Mergers and Acquisitions: In Search of the Golden Fleece
Chapter 3: Starting the Search Prospecting and Evaluation
This famous expedition has been celebrated in the ancient ages of the world
Introduction
If mergers and acquisitions can be thought of as marriages, then the prospecting and evaluation phase is the courtship period of the relationship. During the courtship, both parties need to get to know each other and to evaluate each other against their own needs and expectations. This chapter looks at the important considerations in seeking out a partner and evaluating them as a future M&A partner.
Clarifying the acquisition strategy
A successful courtship will depend on the acquirer having a clear view of their acquisition strategy and intent. The acquisition strategy must provide a context for focused prospecting and for sound evaluation of any prospects that emerge. The important elements of the acquisition strategy to support effective prospecting and evaluation are:
The business intent of any acquisition
The expected strategic business benefits of any acquisition must be quantified as precisely as possible. This may be in terms of improving market position, improved operating performance or entry into new markets. Once the business benefits are clear, criteria can be defined to determine overall success of the acquisition strategy.
The business returns expected from any acquisition
The acquisition needs to be justified on a straightforward return on investment basis. The acquisition costs, including the purchase costs, administrative costs and the integration costs, need to be looked at in relation to the return that is expected. It is a good discipline to go through the exercise, to quantify how...
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