often heard McKinsey requires very broad while very specific framework, what does that mean?
Example Case Question: Client wants to acquire a firm and has three targets between which he needs to decide (all in different industries, Hospital Software, Website development, inventory software):
Question 1: How to approach this problem?
"Would look into:
1) Market attractivity:
- How big are the different market segments?
- What is their growth?
- What is the outlook over the next years, any major trends?
- What is the competitive situation? (Concentration, USP of competition, their reactions)
- What is the market share of the target in the respective market?
- Which segments are there?
- What drives their demand, what is their willingness to pay?
- Are there any entry barriers in the specific market (i.e. regulatory constraints like required health care licenses)
2) Target positioning within market
- What products/services does the target offer? (USP, patents)
- Where do they sell their products (overlap with client somewhere?)
- What's the image of the company in the market?
- Do they focus on specific customer segments within market? (how do they compare to our client?)
- How is the target culture? (how compared to our client?)
- What is the ownership structure (private, public?)
3) Financial attractivity
- Revenues generated by target
- Sales synergies (i.e. cross-selling potential, cannibalization potential)
- Price of target/ upfront investment costs
- Recurring costs of target operation
- Cost synergies (i.e. best practice sharing, economies of scale etc.)
Compare ROI, payback time, NPV of targets
4) Company + Capabilities
- What products, customer segment and geographies do we serve?
- What would add value to our existing customers? (i.e. do we already have hospitals, we can now sell additional software?)
- Acquisition experience?
- Financial warchest (can we acquire only one or several firms)"
Would a structure like this be too broad?
Thanks in advance.