I am struggling a bit with M&A cases and how to make your framework for them structured. So let's say you get an M&A case where the target is to get an ROI of X%, there are two overarching things I want to answer:
- If we purchase, will we get ROI of X%?
- Can we purchase, without any major risks.
Looking into 1, this comes down to the profits from this investment and the purchasing price. Looking at the profits from investment we both have the standalone profits from the target company and its projections, as well as the effect from purchase (synergies, cannibalization, integration costs.). Here is my problem, to evaluate whether or not the profits projections are reasonable, I would want to understand the market and where the target company stands in the market (its positioning, brand, etc.). But how would you make this into a structured issue tree and what would you call your branches?