Special Engagements: Mergers and Acquisitions

Strategic Due Diligence

M&A firms and investment bankers very capably manage financial and legal due diligence, focusing on these critical factors early in the acquisition process. But even the best of such efforts can’t uncover the whole story for any given acquisition — nor can they guarantee success. A critical third component of due diligence is what we call  ”strategic due diligence,” and it’s vital in anticipating the challenges that can derail an acquisition or merger.

Financial and legal due diligence assess the potential value of a deal and focus on making the acquisition at the right price. Strategic due diligence explores whether the apparent potential — however attractive — is realistic. Required more and more by boards of directors who need confidence that an acquisition or merger is the right and best option, it tests the strategic foundation of a proposed transaction with two essential questions:

(1) Is it strategically viable in the marketplace?

(2) Are the essential capabilities available to achieve the anticipated value?

While the first question requires an external focus and the second an internal one, each informs the other, effectively vetting the wisdom of the deal.

Above all, strategic due diligence ensures that no two transactions are treated identically. Because each deal has unique opportunities for value creation or destruction, the necessary investigation is always custom-tailored. Let us help you review acquisition targets and develop confidence about the strategic fit.

Preparation for Acquisition

Too often, companies prepare for acquisition by temporarily reducing or eliminating expense to boost operating margins. But because effective financial due diligence typically uncovers those temporary measures and identifies them as unsustainable, they don’t do much to improve the multiples for selling shareholders.

Our approach focuses on sustainable improvement. By confirming and refining strategies, improving your effectiveness in the marketplace and improving customer retention, we help you not only position your business effectively, but create lasting value that can be sustained even after a transaction is complete. Such measures also improve the perceived value of the enterprise, maximizing the return for your selling shareholders.

Post-Acquisition Integration

Unfortunately, most acquisitions tend to underperform against expectations and the financial models that justified them. They yield disappointing results because, too often, the focus on reducing expenses and eliminating redundant activities adversely affects customer retention, which in turn diminishes revenue.

We help our clients integrate multiple sales and customer service organizations effectively, align sales processes and the management of the customer experience, and focus on customer retention throughout the merger process — reducing expense levels without eroding revenues. These engagements tend to be short-term and very intensive because a great deal of integration effort is concentrated into a very short period.