Mergers & Acquisitions Pay-off Optimization E-Book

Christophe Robinet

• Herausgeber: Books on Demand
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 123

Veröffentlichungsjahr: 2014

Beschreibung

A short pragmatic book about commercial due diligence, i.e. marketing in deal preparation. --- "A MUST READ FOR ALL EXPERTS INVOLVED IN PRIVATE EQUITY AND M&As"(*) --- The book unveils a unique tool: MOSAICS to easily structure market data and articulate analytical tools. It provides a relevant synthesis of marketing fundamentals. The latter and the MOSAICS tool make this work of interest for M&A experts and beyond, for any Marketer. The book features a meaningful analysis of the practice while showing how commercial due diligence can enhance M&A pay-off. --- "A WAKE-UP CALL FOR THE BUSINESS WORLD"(*) --- One may challenge the interest for real life of an academic research. Well, the answer comes from the business world itself: the original manuscript was awarded the yearly Prize by ARFA (the French Association of M&A professionals) and received support from seasoned practitioners (*). --- (*) Refer to the quotes on the fourth cover and the foreword. --- TARGETED AUDIENCE: Financial executives, corporate strategy executives, management consulting and education (business schools'professors & students) --- KEY WORDS: M&A, mergers and acquisitions, pay-off, ROI, investment, value creation, deal value, deal preparation, dataroom, data room, commercial due diligence, commercial analysis, strategy, analytical tools, matrix, Ansoff matrix, BCG matrix, GE matrix, KSF, key success factor, Ohmae 3C, Porter five forces, 8Ps Krippendorf, SWOT, strategic marketing, market analysis, market intelligence, knowledge management, risk analysis, methodology, mosaics model, management consulting, strategy consulting, private equity, PE, investor, venture capitalist, corporate venture, corporate fund, investment bank. --- SOME AUTHORS IN BIBLIOGRAPHY: R.Bruner, A.Chernev, P.Howson, R.S.Kaplan, K.L.Keller, P.Kotler, M.McDonald, P.Millier, A.Reed Lajoux. --- EBOOK OR PAPERBACK: The e-book features all figures and graphs in color whereas they appear in grey levels in the paper version.

Leseprobe

To my wonderful wife, Dorcas, and our children, Lou-Ann and Yaël.

TABLE OF CONTENTS

FOREWORD

HOW TO GET THE BEST OUT OF THIS BOOK

AKNOWLEDGEMENTS

TABLE OF CONTENTS

LIST OF FIGURES AND TABLES

1. INTRODUCTION

1.1 Background

1.2 Main research questions

2. KEY CONCEPTS TO FRAME THE RESEARCH

2.1 What mergers & acquisitions refer to

2.1.1 mergers & acquisitions general definition

2.1.2 M&A, an industry by itself

2.1.3 M&A, one of many means of business strategy

2.2 Motivations and types of acquisitions

2.2.1 drive for acquisitions and players involved

2.2.2 motivation for strategic acquisition

2.2.3 typology of acquisitions

2.3 The process of acquisition

2.4 What does due diligence refer to

2.4.1 definition

2.4.2 legal frame

2.4.3 a key step of the M&A process

2.5 Scope and skills for due diligence

2.5.1 from minimal approach…

2.5.2 … to extensive approach

2.5.3 team and skills set involved

2.6 Summing-up the research field

3 RESEARCH METHODOLOGY

3.1 Literature phase

3.1.1 disciplines involved

3.1.2 sources

3.2 Field phase one: interviews

3.2.1 targeting knowledgeable persons

3.2.2 personalized approach

3.2.3 limited results

3.3 Field phase two: on-line questionnaire

3.3.1 design of an on-line questionnaire

3.3.2 re-targeting knowledgeable persons

3.3.3 using slightly modified messages

3.3.4 exploitable results

3.4 Synthesis and discussion

3.5 Limitations and bias

3.5.1 in relation to the scope

3.5.2 in relation to the method

4 COMMERCIAL DUE DILIGENCE IN LITERATURE

4.1 Key principles for due diligence

4.1.1 consistency with corporate strategy

4.1.2 search what you don’t know, validate what you know

4.1.3 due diligence is more than ever critical

4.2 Definition, perimeter and outcome of commercial due dil.

4.2.1 legal authors… a risk perspective

4.2.2 finance authors… quantitative financial analysis as panacea

4.2.3 key definition: what drives the target’s future

4.2.4 perimeter of commercial due diligence

4.2.5 note on assessment of the management team

4.2.6 CDD concretely assesses risks & opportunities

4.2.7 CDD provides critical input for the price negotiation

4.3 Prerequisites: back to marketing fundamentals

4.3.1 what marketing should be

4.3.2 distinction between market and industry

4.3.3 how life cycles impact strategy

4.3.4 value creation is about satisfying client needs

4.3.5 the art of segmentation

4.4 Applicable analytical tools in CDD

4.4.1 the challenge of an abundant literature

4.4.2 MOSAICS model as an overview

4.4.3 ensuring the correct use of tools

4.4.4 tools related to (MO) market overview

4.4.5 tools related to (S1) segmentation and (A) added alue

4.4.6 tools related to (I) insiders

4.4.7 tools related to (C) competitive positioning

4.4.8 tools related to (S2) strategic positioning

4.4.9 wrap-up

5. FIELD OBSERVATION

5.1 Reminder on methodology

5.1.1 a two step approach

5.1.2 exploitable sample

5.1.3 limitations and bias

5.2 Categories of respondents

5.2.1 key discriminant: degree of involvement in due diligence

5.2.2 consultants

5.2.3 corporations

5.2.4 corporate ventures

5.2.5 other categories with financial drive

5.2.6 other participants

5.3 Tools implemented

5.3.1 as for market overview

5.3.2 as for market segmentation

5.3.3 as for analysis of value proposition

5.3.4 as for competitive positioning

5.3.5 as for strategic positioning

5.4 Information sources and role of intuition

5.4.1 information sources

5.4.2 intuition and rationality

6. OPEN DISCUSSION ON THE PRACTICE IN COMMERCIAL DUE DILIGENCE

6.1 An obvious heterogeneity

6.1.1 use and mastering of analytical tools

6.1.2 internal resources / skills available for CDD

6.1.3 allocated time

6.2 Elements leading to heterogeous practice

6.2.1 acquisition drive

6.2.2 management of the acquisition sequence

6.2.3 distance to current business (or to current biz model)

6.2.4 degree of maturity

6.2.5 nature of offer

6.2.6 other elements

6.2.7 apparent necessity for CDD in the official due diligence time-window

6.3 Consultancy firms as key players

6.3.1 market mapping (their clients)

6.3.2 industry mapping (their peers)

6.3.3 terminology used

6.3.4 behavioral variations

6.3.5 secrecy management and involvement in advisory service

7. CONCLUSION

7.1 Answering the research questions

7.1.1 what does commercial due diligence consist of?

7.1.2 what methodological tools does literature provide to candidate buyers regarding commercial due diligence?

7.1.3 what varies in the practice of commercial due diligence professionals?

7.2 To go further

7.2.1 from an academic standpoint

7.2.2 from a business point of view

7.3 Take home value

8. EXECUTIVE SUMMARY

R. REFERENCES

I Books

II Scientific articles

III Reports and non-registered publications

A. ANNEXES

A to I Examples of analytical tools

J to M Elements of investigation phase

N About the author

FOREWORD

By Professor Drs.R.Sybren Tijmstra

Professor in International Strategy and Management IAE Aix

Graduate School of Management - Aix-Marseille University (FR),

Managing Director TIMS Holding B.V. (NL)

Complement by Mr.Peter Howson

Director of AMR International Ltd (UK),

Distinguished Author of the book[6] “Commercial Due Diligence -

The Key to Understanding Value in an Acquisition”

In this short book, M&As Pay-off Optimization - The Commercial Due Diligence Imperative, Christophe Robinet provides the business world with a wake-up call as well as with an excellent practical tool to act on it.

What is the wake-up call I refer to? We all know that the success rate of strategic acquisitions, in the sense of creating shareholder value, is rather mixed, not to say negative. Companies try to increase the chance of success by putting a lot of effort into financial and legal due diligence.

We also often hear the argument that for acquisitions, specifically of service companies, human resources and corporate culture due diligence might be a useful add on.

However, commercial due diligence is often only used in a very limited way in the process and/or addressed with poor relevance. It is perceived as optional whereas its aim of understanding the value creation mechanism contributes to assess future cash flows and risks attached to the acquisition.

By signalling this in a very convincing way and showing a possible solution, Christophe Robinet has certainly made his contribution to the acquisition practice.

His MOSAICS tool box, in which he combined in a very creative way a lot of existing analytical tools, is excellent. As commercial due diligence is at the crossroad of many disciplines, this task was quite complex, but in my opinion he handled it in a remarkable manner. The excellent way in which he identifies which tools should be used at which stage of the process (environmentclient needs-competitors offer-position in the market and strategic position) makes it very practical and useful.

MOSAICS is applicable to the tools themselves as well as to the strategic information it provides, and can be easily implemented.

This book also draws a meaningful analysis of commercial due diligence practice in corporations, and in investment funds and also highlights the key role of consultants. This puts into perspective the MOSAICS tool box in terms of structuring market and strategic information.

As my own professional life combines international professorships in strategy with the directorship of a strategy consulting firm and own entrepreneurial endeavors, I often witness the struggle of executive MBA students trying to combine in their thesis sound academic work with practical business relevance.

Most theses I have been mentoring as a professor at the IAE-Aix-en-Provence Graduate School of Management (France) in the context of the MBA program Change and Innovation have achieved this objective successfully but this thesis stands out.

Although the time was limited and the topic complex, Christophe ROBINET managed to conciliate both objectives remarkably: academic work serving the business world. The mentoring of this thesis has therefore given me additional insight in the relevance and practice of commercial due diligence which will certainly be useful in my own consulting practice.

Christophe Robinet was granted high honors for this work by our MBA jury. Moreover, it is very rewarding to see that the market recognizes the quality of the work as is illustrated by the fact that this thesis got the ARFA 2012 Prize, a yearly prize given by the M&A Professionals Association in France for the best thesis on M&A practice.

I would highly recommend this work to all company strategists who are working on acquisitions, but also to venture capitalists who are looking for a higher pay-off from their investments and to M&A consultants who want to provide their clients with a solid added value.

Prof.Drs.R.Sybren Tijmstra

COMPLEMENT

Christophe shows us that even though practice has improved considerably acquisitions are still risky, with as many failing as succeeding. The majority of risk in an acquisition correlates to the market. As commercial due diligence is all about assessing market risks and opportunities, serious acquirers should therefore take notice of what he has to say, whether they be strategic or financial buyers.

His ‘MOSAICS’ model is particularly instructive. Commercial due diligence is key to establishing value in an acquisition but in practice is often a poor relation to financial and legal due diligence.

Christophe’s research is an important step in giving the commercial analysis the prominence it should have

Mr.Peter Howson

HOW TO GET THE BEST OUT OF THIS BOOK

The primary audience of this book consists of very busy people from the finance, corporate or consultancy arenas, professionals committed to the success of their projects and ventures and looking to gain efficiency.

This book is also of interest for professors, researchers and students of universities and business schools, desiring to broaden their knowledge… but too often short on time!

To make this book profitable for you, busy readers, here are some insights and suggestions.

The questions at stake and how they are answered

Basically, three main questions are addressed:

Commercial due diligence… What is that? What is it for?

What is the theory? What does literature say about it?

How is it implemented in real business life? What is the practice?

In a nutshell

On the front page of each chapter stands a short paragraph entitled “in a nutshell” which briefly describes the content of the next sections.

Chapter 8 features a summary of the book, enabling you to get the big picture. However, you might miss valuable details if you skip over chapters.

Overview of chapters

Chapter

1

debates the success and failure in M&As

Chapter

2

opens and frames the leading questions about commercial due diligence

Chapter

4

is the core part of the “theory” of commercial due diligence in literature; it features the MOSAICS model, a valuable help articulating the analytical tools as well as the information they output

Chapter

6

represents the core part of the “practice”, featuring analysis of the practice, heterogeneity, and the key role of consultancy firms

while:

Chapter

3

describes the methodology

Chapter

5

gathers field observations

Chapter

7

concludes and opens new questions

Chapter

8

features an executive summary

Only one question for you

You might want to (or have the time to) focus on one single item. Three suggestions:

To discover what the

MOSAICS model

stands for and how it works… go directly to chapter

4

, section

4.4

.

To make-up your mind about the

practice including consultants…

browse chapter

6

and especially section

6.3

.

To understand and challenge the way the

field investigation

was conducted… refer to chapter

3

and chapter

5

section

5.1

.

Commercial due diligence will sometimes be noted under CDD acronym.

How this book was conceived

This book is the updated version of an MBA thesis entitled “Commercial Due Diligence - Theory and Practice in Strategic Acquisitions” defended in 2012 within the international MBA program “Change and Innovation” of IAE Aix Graduate School of Management, France.

The original version was awarded the ARFA PRIZE 2012 in the Master’s Degree category. This yearly distinction recognizes the best thesis on M&A practice from French Business Schools and Universities by ARFA (M&A Professionals Association in France).

Although being originally a piece of academic research work, it appears to relevantly serve the business world.

The topic systematically has raised interest and questions in the many conversations I have had with professionals in the field. Many encouraged me to move out of a confidential approach and rather publish this work.

It is thus a pleasure to share it with a broader audience through this 2014 edition.

In this book, you are provided with a simple tool: MOSAICS. You are invited to challenge and strengthen your due diligence process.

I wish you a fruitful reading of these pages, resulting in more successful M&A operations.

Christophe Robinet1

1 Author’s profile and contact details provided in annex N

AKNOWLEDGEMENTS

I would like to express my gratitude to those who made this book project become reality.

First, I want to thank Pr Sybren Tijmstra, Distinguished Professor in International Strategy and Management at IAE Aix Graduate School of Management and Audencia Nantes, for his stimulating and pragmatic guidance through the fruitful discussions we had during the preparation of my MBA thesis, and for his support to my book project especially via his foreword.

Pr Sybren Tijmstra was teamed with two other tutors from IAE Aix: Dr Carolina Serrano-Archimi, Director of the MBA Change & Innovation and Dr Pierre-Xavier Meschi, Professor of Strategy and Business Policy; I thank them both for their suggestions and encouragements precious along the way, for seeding the idea of transforming my manuscript into a book, and for inviting me to submit my thesis to the ARFA yearly selection.

I want to express my gratitude to Mr Peter Howson (UK), Director of AMR International, a noted authority in commercial de diligence, author of a book which is a key asset in my references. Thanks for supporting this book via special quote on the cover and complement to the foreword.