Case Studies

Innovative strategy

Shrink or Die
In today’s economy, many companies are faced with challenges that fundamentally change their business economics. Just as the mainframe computer industry had to redefine itself and make a transition into the world of personal computers.. Read more

 

May I Have this Dance?
Accepting the Right Offer

Strategic growth

Organic growth is typically viewed as a safer bet than growth through acquisitions. The parameters are well understood; the competitive landscape, the products being offered, price points, barriers and how one measures success. But frequently, rapid growth is a necessity either for long term strategic advantage or because the cost of infrastructure is so great that a company can’t wait for organic growth to pay for the costs. Deciding which companies to acquire is tricky and knowing when to say no can be as critical as when to say yes.

An IT client was inundated with companies looking to sell. While our client was interested in making some good acquisitions, they had been looking opportunistically rather than strategically at which companies to buy. They had so many offers from within their industry and were consumed with looking seriously at nearly every offer that came across their desks.

There were two major problems right from the start. First, they wasted a lot of the effort of their key resources, the CEO, the CFO and his staff, sales and many others to investigate each opportunity. It got to the point where they were struggling to get their “day jobs” done because they spent so much time investigating potential acquisitions. The other major problem was that they looked at valuations rather than strategic fit. They could have easily gotten a bargain on a company because of its great value economically, but in doing so, would have forgone an opportunity to move them in the direction they wanted to go.

We worked with top management to develop a screening process based on their top strategic initiatives. The output from the screen allowed our client to evaluate potential acquisitions based on the screening criteria and rank all candidates based upon the screen. Output of the model was used to provide the board with short and long term capital requirements of each candidate as well as anticipated growth related to each.

Eventually, the screen was developed to identify which potential candidates had the best overall fit, including candidates that were not being pursued. A short list of the five best candidates was developed and eventually our client acquired the company that was number two on this list.