Hi Everyone,
As I am approaching my final round at McKinsey, I have started to become fussier about my issue trees and whether they are MECE.
I came across this 'textbook' M&A case on one of the business school books:
Your client is a concrete manufacturer and is considering acquiring a small local firm in the concrete manufacturing industry. What factors should be considered?
So, my approach has five buckets which are 5 micro-hypothesis:
- The client current position is suited to an acquisition
- current customer segmentation and regions of operations etc
- Capabilities:
- We lack capacity and we want more or new channles/markets
- We have not mastered some new process
- We have not quite reached ecnomy of scale
- We can afford it
- The target company is a good fit and we can generate value
- We can generate substantial synergies
- Revenue syn...
- Cost savings syn...
- The company is not overvalued
- There is no obvious cultural clash
- The cost of integration is known and acceptable
- We can generate substantial synergies
- The demand (industry) is big and growing and justifies the acquisition
- Growth rate, growing segments and stuff along those lines
- There are no hurdles to this acquisition
- No regulatory obstacles
- Competitors are not expected to retaliate
- There are no better alternatives
- Joint venture?
- Other target companies?
What do you think? I see a lot of people have a separate bucket for Synergyes. Is it wrong to have it in the target section? I look forward to your feedback.
Thank you!
Best,
Andy