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Hi, I would like to know about the case framework which we can use for technology M&A deal adviosry

London M&A technology
New answer on Aug 20, 2020
2 Answers
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Mat asked on Aug 19, 2020

Hi, I would like to know about the case framework which we can use for technology M&A deal adviosry . Any pointers or suggestions with live case example and analysis will be helpful

Tia

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Ian
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replied on Aug 20, 2020
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi Mat,

Great question and there's a lot of ways to approach this very broad topic!

Market Entry Context / Objective

The first step is to make sure you're clear on why the company is looking to enter the market. Is it for topline growth, bottom-line growth, diversification, to gain economies of scale, to gain market share, build new skills/competencies, pre-emptively strike a foreign competitor, ahieve a long-term vision (applies well to an NGO) etc.?

Once you have this, you can get a feel for which of your 3-4 classic market entry buckets (company, market, competitor) you want to tackle first.

For example, if it's topline growth, the market size probably matters most. If it's economies of scale or building skills/competencies it's company first. If it's strike a foregin competitor or even bottom-line growth (for a comparison) it's competition first. I think you get the gist

Acquisition Target Identification

But, first you have to clarify the objective. So, what do they want to achieve with these acquisitions? Are they trying to acquire companies within their existing industry so as to reduce competition? Are they looking to acquire companies with knowledge they don't have? ARe they looking to vertically integrate? Horizontally integrate? Perhaps most importantly, are they prioritizing topline or bottomline growth? Finally, what's the budget? I.e. how big can these companies be?

Clarifying the exact purpose is incredibly important, as you cannot identify, screen, and prioritize if you don't know what you're looking for!

Let's assume you've asked this in the case. A quick and dirty approach would be

Identify

  • Look at the "world of" targets (consider below approaches)
    • Look in public sources for companies that have said they'r looking to be bought, or those that might want to be
    • Reach out to the local network to find potential targets
    • Hire a PE firm
    • Etc.
  • Once one or many of the above approaches have been selected, we can get a list of possible targets

Screen

  • From this list, we need to first eliminate anything that doesn't fit (i.e. doesn't meet table stakes). This could be
    • Too big
    • Too expensive
    • Doesn't address key objective/needs (clarified in the prompt) (i.e. not in an interesting industry, etc.)
    • Not

Prioritize

  • We should have a shortened list now, but we need to figure out what matters (relates to above clarifying question)
  • We need to pick the top 3-4 things that matter, rank them, and use those as selection criteria. Some of these could be
    • Positive cash flow
    • Genuinely interested seller
    • Fits our market
    • Fills a hole in our existing capability
    • Reduces competition
    • Gives us a new customer base
    • Is a valuable brand
    • Strong IP
    • Culture fit
    • etc.
  • We can then rank the companies across these criteria to make a shortened list of ~10-20 to approach seriously

To get the above information/data, we can:

  • Request income statements, balance sheets (or, if they're public, find them online).
  • Talk to industry experts
  • Speak with company contacts
  • Speak with company customers
  • Review government industry reports

Practice Cases

https://www.preplounge.com/en/management-consulting-cases?language=en&topic[]=3&topic[]=1&topic[]=19&sort=real-case-desc&page=1&perPage=20

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Mat on Aug 20, 2020

Thanks Ian for the detailed reply. This will definitely help me form a base. This is for a case interview,it's for two hours and since this is my first case interview, I'm not sure what to expect also considering the case will be given one hour time to solve and one hour to represent the cade. I would like to know whether the case can be presented in ppt instead of whiteboard if yes could you suggest how I have to go about with the slide content. Tia

Anonymous replied on Aug 20, 2020

Hi Mat,

Do you eva any particular case in mind?So that I can help you with a specific framework.

Best,

André

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Mat on Aug 20, 2020

Thanks Andre, for taking time to reply. Unfortunately I dont have any idea, as this is my second round with one of the big fours and all they told me is, they will give me a technology based case study for DDV and I will have one hour and one hour of presentation. Any idea what I can expect ? I'm a newbie in this forum and new to this industry as well. Any pointers will add value

Ian gave the best answer

Ian

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