Tracking pipeline metrics goes a long way to providing a constant health check of M&A and corporate development initiatives. Doing so can provide valuable insight into the number of potential acquisition targets being evaluated & in what stage, why targets are being rejected, where things are being held up and how a company is tracking towards achieving its overall corporate development objectives. If this reporting discipline is currently missing from your M&A workflow it's surprisingly easy to change your ways via a Smart M&A Platform.
M&A reporting has traditionally been characterized by a manual process, whereby deal teams collate reams of data and work it into a static PowerPoint report – which inevitably becomes out of date within hours. The process is repeated week-after-week prior to Monday morning progress meetings - often by a number of ambitious analysts, who are at risk of becoming disenfranchised with the world of M&A if they are led to believe that "grunt work" is all they are good for.
The traditional approach to running an M&A process is destined for the archives of a museum – think piecing together a number of non-dedicated tools – such as Excel spreadsheets, Word documents, PowerPoints and paper files– plus re-inventing the wheel for each deal.
In today’s world of deal making, technology is enhancing M&A processes and set to become the new normal.
Smart companies constantly review and adjust their portfolio of businesses to thrive in today’s fast-moving world. Driving active, efficient, and transparent corporate development, particularly M&A, has become a core institutional competency. However, many acquirers are running their M&A process today the same way they did in 1999 – with fragmented processes, siloed apprenticeship culture, and individual productivity tools. To build the M&A engine needed in 2018 – Smart M&A – acquirers need to rethink their Culture, Processes, and enabling Technology.
Let me tell you a story of how I discovered that the self-storage warehouse I use for storing my old shoes and books trades at a higher revenue multiple than most SaaS companies.
Digital business models and the innovation, efficiencies and new market opportunities they can offer are fueling an M&A storm. Today, traditional motives for M&A, such as the pursuit of synergies or gaining entry into a geographic market, are being replaced by the pursuit of digital transformation. For many companies, emphasis is now geared around acquiring new technologies or capabilities - these represent the promise of rapid growth and can help to “future-proof” a company as innovative and disruptive ways doing business become the new normal.
Research by leading consultancy firms indicates that supply chain synergies may constitute 30%-50% of merger-related increases in shareholder value. The purchase of goods and services often represents more than half of a company’s total costs, so procurement usually delivers a significant share of total synergies, with savings estimated to range from 5-25%. Procurement integration is therefore integral to delivering shareholder value.
In this webinar, Bernard Gunther of Spendata discusses how to unlock value from procurement integration. The agenda covers:
- An overview of why generating indirect cost-savings is important to merger economics;
- An analysis of how procurement integration can unlock value and prevent cost savings "being left on the table";
- Target areas to consider in achieving additional cost savings;
- How to put the proposed theories into practice;
- Recommendations on the data you need to be monitoring and analyzing to track your success in leveraging these tactics.
In looking to establish an M&A process, it’s important to start with the basics and add detail gradually. A common mistake is to “copy & paste” a sophisticated best practice process and to attempt layering it upon your organization. While the process might look great on paper, in reality there are likely to be too many steps and concepts to follow – many of which will feel foreign. Indeed, you may feel like you are just following process steps rather than focusing on what is most relevant and important to the deal.
The consumer goods sector experienced a record breaking year in 2017 with total deal value equaling ~$350bn, a 25% increase from $280bn in 2016. This increase was driven by strong mega-deal activity in 2017 (transactions exceeding $5bn) with eight mega-deals amounting to ~$200bn (versus five in 2016 totaling ~$30billion) – a notable example being Amazon’s $13.7bn acquisition of WholeFoods.
Massive strides in innovation are disrupting today's traditional transportation systems. Through ride-sharing, autonomous technology, alternative energy and fuel developments, investors and corporates have capitalized on transportation industry shifts. Now, sights are set on the new frontier of travel opportunities – aviation.