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Sidi

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Case Structuring: Broad (All Angles) vs Specific (Targeted)

Case Prompt
A global foods maker and marketer, which is based in the US, is contemplating a strategic acquisition of a smaller British confectionery company to bolster its presence in emerging markets and establish a footprint in additional businesses, such as gum and candy. They've hired our team to help them evaluate this potential acquisition and help the senior leadership make a decision. Which key pieces of analysis would you look at to guide them?

Structure 1 (Specific)
Case structure

Structure 2 (Broad)

Which of the case structures above would an interviewer prefer?

Case Prompt
A global foods maker and marketer, which is based in the US, is contemplating a strategic acquisition of a smaller British confectionery company to bolster its presence in emerging markets and establish a footprint in additional businesses, such as gum and candy. They've hired our team to help them evaluate this potential acquisition and help the senior leadership make a decision. Which key pieces of analysis would you look at to guide them?

Structure 1 (Specific)
Case structure

Structure 2 (Broad)

Which of the case structures above would an interviewer prefer?

(editiert)

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Coaching mit Sidi vereinbaren

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Hi Anonymous!

I believe the first structure is a better starting point. However, it still needs significant improvement.

Structuring a case does not primarily mean to explain the interviewer WHAT you want to look into (the "buckets")! Structuring a case primarily means to explain the interviewer HOW you are going to answer the specific question that has been asked!

So your structue needs to be a LOGIC, not a set of qualitative buckets! Such qualitative elements (Customers, Market, Product, Competition, etc.) are nothing more than influencing factos that determine the answer to the question THROUGH the logic that you have outlined. This is how you think as a strategy consultant, and this is how you work out the approach towards strategic problems on real engagements. And you might not be surprised that this is also by far the best way to approach case questions in a rigorous way.

So the most important part you need to verify in such a case is whether the strategic move (the acquisition) will help reach the client's objective. If this objective is of financial nature (e.g., profit), then your structure needs to verify whether the target profit increase can be reached or not. This is operationalized by a clear criterion according to which the answer to the client's question is YES or NO. For example, it could be:

"If the additional profit generated by the acquisition exceeds the corresponding investment costs by at least 25% (the required return; to be verified with interviewer) over X years (the investment horizon; to be verified with interviewer), then it makes financial sense."

--> [additional yearly profit] x [investment horizon in years] > [investment cost] x 1.25

This is the core part of the structure - the financial analysis. You then need to quantify the elements of this inequality and check whether the inequality can be met or not. This is usually done by driver trees to which you then attach the typical qualitative buckets as outlined in your second structure.

But it does not make sense to have a seperate bucket like synergies on the same level as financial analysis, since synergies drive the financial analysis! The same is true for what you call "Benefits". These need to sit on a deeper logical layer, since they influence the financial result. The other elements such as capabilities and risks are side conditions which you also need to outline in the beginning, but they will not be the main focus of the analysis and usually only get scrutinized towards the end of the case to outline next steps/additional analysis required.

Cheers, Sidi

Hi Anonymous!

I believe the first structure is a better starting point. However, it still needs significant improvement.

Structuring a case does not primarily mean to explain the interviewer WHAT you want to look into (the "buckets")! Structuring a case primarily means to explain the interviewer HOW you are going to answer the specific question that has been asked!

So your structue needs to be a LOGIC, not a set of qualitative buckets! Such qualitative elements (Customers, Market, Product, Competition, etc.) are nothing more than influencing factos that determine the answer to the question THROUGH the logic that you have outlined. This is how you think as a strategy consultant, and this is how you work out the approach towards strategic problems on real engagements. And you might not be surprised that this is also by far the best way to approach case questions in a rigorous way.

So the most important part you need to verify in such a case is whether the strategic move (the acquisition) will help reach the client's objective. If this objective is of financial nature (e.g., profit), then your structure needs to verify whether the target profit increase can be reached or not. This is operationalized by a clear criterion according to which the answer to the client's question is YES or NO. For example, it could be:

"If the additional profit generated by the acquisition exceeds the corresponding investment costs by at least 25% (the required return; to be verified with interviewer) over X years (the investment horizon; to be verified with interviewer), then it makes financial sense."

--> [additional yearly profit] x [investment horizon in years] > [investment cost] x 1.25

This is the core part of the structure - the financial analysis. You then need to quantify the elements of this inequality and check whether the inequality can be met or not. This is usually done by driver trees to which you then attach the typical qualitative buckets as outlined in your second structure.

But it does not make sense to have a seperate bucket like synergies on the same level as financial analysis, since synergies drive the financial analysis! The same is true for what you call "Benefits". These need to sit on a deeper logical layer, since they influence the financial result. The other elements such as capabilities and risks are side conditions which you also need to outline in the beginning, but they will not be the main focus of the analysis and usually only get scrutinized towards the end of the case to outline next steps/additional analysis required.

Cheers, Sidi

(editiert)

Coaching mit Axel vereinbaren

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From my perspective, both frameworks are pretty weak and have some relatively big issues. General, I would prefer a specific framework but it needs to target the key questions and objective for the client.

Framework 1:

- Not all the buckets are specific drivers of the decision on whether or not they should acquire the British confectionery company (especially risks, benefits)

- Not MECE (the content you have in synergies could also be under benefits and vice versa)

- Pretty generic in the sense that the framework could be applied to almost any industry

Framework 2:

- Very generic M&A framework

- The "buckets" are not tailored to the situation or achieving the client's specific objectives (increase exposure to emerging markets, establish a footprint in confectionary)

I would frame something to the tune of:

1. Would acquisition improve market presence in attractive market segments (emerging markets, fast growing verticals)?

2. Is the British confectionary company an attractive asset?

3. What are the synergies / dysynergies of acquiring the company?

4. Does the acquisition make financial sense from a valuation perspective?

I can let you think about what the sub drivers would be from each of those questions.

Hopefully useful!

-A

From my perspective, both frameworks are pretty weak and have some relatively big issues. General, I would prefer a specific framework but it needs to target the key questions and objective for the client.

Framework 1:

- Not all the buckets are specific drivers of the decision on whether or not they should acquire the British confectionery company (especially risks, benefits)

- Not MECE (the content you have in synergies could also be under benefits and vice versa)

- Pretty generic in the sense that the framework could be applied to almost any industry

Framework 2:

- Very generic M&A framework

- The "buckets" are not tailored to the situation or achieving the client's specific objectives (increase exposure to emerging markets, establish a footprint in confectionary)

I would frame something to the tune of:

1. Would acquisition improve market presence in attractive market segments (emerging markets, fast growing verticals)?

2. Is the British confectionary company an attractive asset?

3. What are the synergies / dysynergies of acquiring the company?

4. Does the acquisition make financial sense from a valuation perspective?

I can let you think about what the sub drivers would be from each of those questions.

Hopefully useful!

-A

Coaching mit Ian vereinbaren

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Hi there,

A few thoughts

1) Risks is not a bucket

2) Benefits is not a bucket

(Both of these should generally be embedded in your analysis and are implicit).

I like

The Market Bucket in exhibit 2

The Target Company in exihibit 2 PLUS financial performance in exhibit 1 (they're the same concept)

Synergies (And dis-syngeries btw) in exhibit 1 PLUS Client in exihibit 2

In summary, you are saying:

  • Is the market big and attractive and growing overall? (If yes, great, let's keep digging. If no, maybe the company is still good within a bad market, but this isn't a good sign)
  • Is the target company attractive and growing overall? (If yes, great, let's see what it's worth today. If no, let's still see if we can change this)
  • What happens once we acquire (Will it grow in value because of synergies? Or will it be worth less? Can we actually do this - financially and logistically)

Hi there,

A few thoughts

1) Risks is not a bucket

2) Benefits is not a bucket

(Both of these should generally be embedded in your analysis and are implicit).

I like

The Market Bucket in exhibit 2

The Target Company in exihibit 2 PLUS financial performance in exhibit 1 (they're the same concept)

Synergies (And dis-syngeries btw) in exhibit 1 PLUS Client in exihibit 2

In summary, you are saying:

  • Is the market big and attractive and growing overall? (If yes, great, let's keep digging. If no, maybe the company is still good within a bad market, but this isn't a good sign)
  • Is the target company attractive and growing overall? (If yes, great, let's see what it's worth today. If no, let's still see if we can change this)
  • What happens once we acquire (Will it grow in value because of synergies? Or will it be worth less? Can we actually do this - financially and logistically)
Coaching mit Clara vereinbaren

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Hello!

I am not in love with any of the 2 since they are missing details -agreeing with the last posts-.

However, if I had to choose one, I would prefer the 1st one. At least, it lands quicker on the points.

HOpe it helps!

Cheers,

Clara

Hello!

I am not in love with any of the 2 since they are missing details -agreeing with the last posts-.

However, if I had to choose one, I would prefer the 1st one. At least, it lands quicker on the points.

HOpe it helps!

Cheers,

Clara

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