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3D Picture

The Full 3D Picture

It is our view that many, perhaps most, acquisitions suffer from a form of tunnel vision – a one-dimensional view of the process, based essentially on the finances. And while we would not minimize the importance of the numbers, we would argue that there are some equally important issues that are frequently skated over at best, and at worst ignored altogether.

The M&A Team philosophy is based on acquiring a full 3D picture of any deal – the ‘fit’ in operational and cultural, as well as financial terms – before the deal is negotiated, as well as the development of a comprehensive post-acquisition strategy. Making sure that the different departments in each of the businesses can and will work efficiently together – producing, if you will, a compound interest factor.

To that end, we have developed some proprietary software, which we call UpSize, which produces a map of your business under three key headings: Financial, Operational and Cultural. On its own, it helps clarify a business's strengths, weaknesses, opportunities and threats - which is useful - but its real strength is when the same methodology is applied to a prospective acquisition. Compare and contrast the two maps, and you get a clear picture of where the stresses are going to be in the expanded post-acquisition business.

It is recognised that culture clash is the single biggest issue contributing to the unacceptably high failure rate of so many acquisitions (50 - 75%, depending on which research you buy into). If you recognise the problems in advance of the deal, there is a chance of doing something about it in your comprehensive post-acquisition strategy.

 

Typical Financial Map

 

 

Of course, in extreme cases, you might decide that the differences are too great a risk to your investment and pull out of the deal. Given the amount of owners’ and shareholders' funds that are currently wasted on bad deals, where such differences are not recognised until it is too late, The M&A Team argue that it is better to invest in the costs of research and business mapping to improve the odds of a successful acquisition or merger.


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