Mergers & Acquisitions Due Diligence

Financial statements tell a story. What story did the target organization want to tell?

Due diligence is more than taking numbers from financial statements and dropping them into a valuation model. Although making valuation estimates in models is part of the acquisition process, understanding the operational reality of the target requires more insightful analysis. Our extensive experience in business intelligence and M&A provide invaluable perspective on synergies, unintended consequences, hidden costs and opportunities, and sensitivity analysis of key assumptions.

When it comes time to make a go/no-go decision, manage your risks by having an expert identify and elaborate on the drivers of profitability and loss.

 

Post-Acquisition Integration

Once you’ve decided to make the investment in an acquisition, the hard work begins: different cultures, different systems, different operating models, different business intelligence...

Not getting the expected ROI on an acquisition is frustratingly common. This failure is the result of either not fully understanding the drivers of profitability before the acquisition or failing to effectively integrate the acquisition after the transaction. Creating and following the right plan for integration is at least as important as getting the right price.

No matter which phase of the acquisition process you are in (from composing a Letter of Intent through to struggling with cultures and systems after several attempts post-transaction), we can help get you where you need to be. Let us help you help your employees and customers to realize the promised potential of your M&A activities.

Efficiency Opportunities

Do you need to do more with your existing resources? Maybe you need to do the same amount of work, but with lower costs?

Since the beginning of the Industrial Revolution, our economy has marched toward greater efficiency. If you aren’t getting more efficient with each passing year, then you are falling behind. Lean methodologies enable organizations to improve the efficiency of production staff, but there are often difficult decisions to be made with respect to management and non-benchmark employees. Indeed, it is often the case that the largest sources of low value-added costs are to be found in places other than the front-line staff.

When such difficult decisions need to be made, it is often better to have an independent third-party review and recommend where and how cuts are to be made. This ensures that the right decisions are made while minimizing residual cultural impacts among the remaining staff.

Effectiveness Opportunities

As every executive knows, there are trade-offs to be made when making big decisions. One of the most common trade-offs is between efficiency and effectiveness. For example, you can increase the quality and quantity of customer service, but at a cost. Alternatively, you can reduce overhead, but may short-change your customers.

Where you decide to invest to improve effectiveness and where you decide to cut to improve efficiency is best determined with respect to your unique business strategy. Embedded within your strategy is an often poorly understood series of connections between your capabilities and your target market. One key is to remember that your core competency defines the value proposition you offer your customers.

Using our BICASE approach, it becomes clear which capabilities empower your core competency (and therefore enhance the value you provide your customers) and which competencies consume more value than they produce. Once your organization is understood within this context, it becomes possible to make well-informed decisions to transform your business quickly and substantially.

Organizational Structure Opportunities

Which of your employees are generalists and which are specialists? Why?

What is the right span-of-control for your employees? Does it vary by function or role? Why?

There are many ways to structure an organization and some positions are less critical than others. Our BICASE approach enables us to highlight the critical value chain in your organization to focus on those decisions that will have the most impact on your results. Once the key opportunities from the value chain are identified, we work with you to better understand the inherent trade-offs of the options available to you.

Our goal is to ensure you have the right assets in the right place to create an optimal blend of efficiency and effectiveness to accomplish your objectives in alignment with your strategy.

Model Office Pilots

Sometimes there is no better way than to follow the prophetic advice of, “we learn by doing”. This can be the case when there are too many variables to comfortably appreciate all potential consequences of a change or when there are too many integrated processes and systems to make a fundamental change without incurring an unacceptable systemic risk. In these situations, we recommend creating a pilot with defined parameters of scope, duration, cost, and measurable outcomes. We facilitate discussions and working sessions to plan and execute such pilots.

Our expertise in business intelligence, organizational structure, and M&A enable us to design, plan, and measure pilots to ensure you are able to make optimal decisions from the results.