How To Build A M&A Strategy

How to Build a M&A StrategyDevelopmentCorporateDevelopmentCorporateContents• What is an M&A Strategy• Strategy Development Process Overview• Determine Business Plan Drivers• Determine Acquisition Financing Constraints• Develop Acquisition Candidate Lists• Build Preliminary Valuation / Return Models• Rate / Rank Acquisition Candidates• Review / Approve Acquisition Strategy• DevelopmentCorporate OverviewDevelopmentCorporate2What is an M&A Strategy?• Roadmap for your firm’s corporate development efforts• Translates strategic business plan into a list of target acquisition candidates• Provides a framework for evaluating acquisition candidates• Enables management team, board of directors, and investors to get on the same pageDevelopmentCorporate3M&A Strategy Process• Determine Business Plan Drivers• Build Preliminary Valuation – How can your strategic business plan Modelsbe accelerated or more successful via – What are the initial estimates of M&A?acquisition cost? What returns could • Determine Acquisition Financing be produced?Constraints• Rate/Rank Acquisition Candidates– How can you fund acquisitions? – How do various acquisition What returns must be achieved? candidates rank in terms of impact to Who approves funding?business and feasibility of closing • Develop Acquisition Candidate acquisition?List• Review & Approve Acquisition – What specific private and public Strategycompanies are you interested in – Do all of the critical stakeholders acquiring?(executive team, board, & investors) agree with strategy and priorities?DevelopmentCorporate41. Determine Business Plan DriversTranslate your company’s strategic business plan into a set of drivers and requirements that your M&A strategy will addressDevelopmentCorporate5Business Plan DriversExtract key information from your firm’s strategic business plan1. What markets do you want to be in?2. What share do you want of each market?3. What products/technologies does your roadmap require?4. What geographies do you want to operate in?5. What types of people, skills, & experiences do you need?Acquisition strategies are derived6. What financial targets do you wish to achieve?from strategic business plans. Youneed to have your basic strategic7. Do you need to pre-empt your competitors?plan in place first before you candevelop an effective M&A strategy8. How much risk are you willing to take?DevelopmentCorporate6What markets do you want to be in?Supply Chain Related MarketsPlanMakeDistributeSellServiceDemand PlanningManufacturing PlanningInbound LogisticsSales ForecastingReturns / ExchangesApparel Assortment PlanningManufacturing SchedulingInventory ManagementShelf AssortmentWarranty ServicePlanogram PlanningInventory ManagementCarrier Capacity ManagementPrice ManagementField ServiceFloor PlanningInbound LogisticsFleet ManagementTrade & Promotion MgmtLoyalty ProgramsSpace PlanningProduction ControlOutbound LogisticsPoint of SaleSpend ManagementQuality ControlStore ReplenishmentMarkdown ManagementProcurementOutbound LogisticsVendor Managed InventoryE-CommerceReverse AuctionsCost AccountingWarehouse ReplenishmentConsumer Credit & PaymentsOrder ManagementSupplier PaymentsTransportation ProcurementAdvertising ManagementSupply Chain Network designSupplier Performance MgmtFreight Audit & PaymentLabor ManagementSupply Chain OptimizationWarehouse ManagementGlobal Trade ManagementLoss PreventionProduct Lifecycle ManagementSupplier PaymentsProduct Data ManagementHorizontal / Enabling TechnologiesEDI TranslatorsBar CodingRFID SOAERPEDI VANOrder Life Cycle ManagementCPFRBPMCRMEDI - Enterprise-scale Warehouse ManagementSupplier Col aboration PortalsEAIApplication Development / OutsourcingDeploymentData Synchronization - Private Electronic PaymentsWeb FormsB2B IntegrationContent ManagementCatalogueData Synchronization - GDSN POS - AnalyticsSupply Chain AnalyticsAdaptersSystems Infrastructure & Data PoolManagementAS2 CommunicationsPOS - Transaction SystemsSupply Chain VisibilityBusiness IntelligenceMass File TransferScan-based TradingTrading Partner MgmtSecurity= solid growth= flat to low growth= flat to declining growth1. Understand the structure, size, growth, and trends of existing markets2. Identify markets/market segments your firm wishes to enter via M&ADevelopmentCorporate7What share do you want of each market?• Once you’ve identified the markets you want to participatein, you need to determine what your target market share is• You need to be honest. All tech companies claim to “be theleading provider of XYZ solution”• The reality is that product/service revenues determine marketshare• Your relative position in the market determines what strategies& tactics will yield best results• Review Geoffrey Moore’s Gorillas, Chimps, & Monkeys conceptsin his book “The Gorilla Game”DevelopmentCorporate8What products/technologies does your roadmap require?BuildBuy• Identify specific products or technologies that your strategic product roadmap requires• Determine timeline when solution has to be available to achieve market share targets• Honestly assess the time, costs, resources, and risks associated with build options• Recognize that ‘buy option’ may not yield a solution that is 100% match with yourteam’s vision of the market requirementsDevelopmentCorporate9What geographies do you want to operate in?• Determine your current geographic footprint• Identify major geographies you want to expand to:• Europe• Middle East• Asia• South America• Determine the relative sequence you would prefer(Europe first, Asia second)• Determine preference for either direct operations orbuild presence via agents, resellers, partners, etc.DevelopmentCorporate10