In the context of data scarcity, time pressure and future unpredictability, how to achieve a well-rounded and thorough assessment of a potential acquisition target?

Gauging a company’s attractiveness is no easy feat. A review of a target’s financial performance may tell you about their financial health at present, but what happens if the external environment changes or a new competitor enters? Will they be able to adapt to new customer preferences, enter new markets or innovate?

In order to truly evaluate the strength of an acquisition, the potential buyer must build an in-depth knowledge of the target company and the market in which it is positioned. This can prevent costly mistakes and future issues such as:

• Entering a segment with a lower capacity to grow than expected, due to overcalculating the addressable demand or market share projection
• Stunted growth as a result of overestimating growth levers and market movements
• Reduced profitability from cannibalization or anti-synergies which were not identified through deep channel dynamics understanding
• Selecting the wrong target for the acquirer’s strategy and ambitions due to an imbalance in the value assessment equation
• Failure to achieve the mid-term objective of selling the company, following an ambitious evaluation of the exit strategy and commercial equity
• Acquisition of companies with commercial capabilities that hinder or even block growth and innovation ambitions, due to an incomplete capability assessment

We help our clients make fully informed decisions that prevent unforeseen risks and maximize value creation.

Integration’s differential lies in putting our marketing & sales knowledge and pragmatic implementation experience at our clients’ service, in order to test and challenge the investment thesis from a commercial perspective. This supports and drives the decision-making process, raises awareness and answers questions that directly impact M&A success.

Integration provides a tailored approach based on your objective and whether it is a merger or acquisition, typically completing some or all of the below activities:

1. Market Overview, Growth Opportunities & Risks Mapping:

• Providing a deep understanding of the acquisition target’s sector – not only gathering data and trends, but also interviewing players within the business ecosystem to bring a realistic view of the market, growth scenarios, risks and mitigation routes.

2. Competence Map:

• In the case of an acquisition: evaluation of the target’s capability to differentiate, innovate, grow and improve, as well as how this will affect the investment thesis and value equation.
• In the case of a merger: evaluation of both the client’s and the target’s commercial competences, to identify and estimate the value of synergies and anti-synergies.

3. Synergies and anti-synergies (for mergers)

• Identification and estimation of the commercial synergies realized through the merger externally (e.g. distribution reach, channel penetration, client relationship) and internally (e.g. marketing and trade marketing, structure, team and execution).
• Assessment of how long the synergies will take to embed and impact the businesses, based on our extensive experience in GTM design and implementation.

4. Financial Simulation of commercial aspects

• Creation of a financial model which helps project value into the future considering all relevant variables

5. Exit Strategy (usually for Private Equities or short to mid-term investments)

• Mapping of the exit options and the success factors for achieving them, based on interviews with relevant players, benchmarks and data.

Should our clients go ahead with a merger or acquisition based on this commercial due diligence, we are also able to support them in the post-merger integration (PMI) phase.

Ability to prioritize business opportunities, make Go/No Go decisions, and conduct informed strategic planning as a result of:

• Ability to size and value market segments according to current and potential category offerings
• Clarity on the competencies required to capture market opportunities
• Improved evaluation of risk and opportunity
• Accurate financial models which are finetuned to reflect market realities and drivers (and which can be adjusted based on the changing environment)

Increased likelihood of success in market moves as a result of:

• Identification of the best entry strategies in a new market according to the strategic objectives of the company and expected gains
• Improved connection and relationship with important market players who can facilitate the move
• Identification of synergic categories which can create gains in scale and consequent dilutions in cost.

Our aim is simply to provide you with the confidence to make informed decisions about M&A.

This means we will enter as and when you need our support and at the level of depth required, according to your objective, business strategy and areas of doubt.

For example, if your objective is focused on acquiring a target to generate value for a later sale or capital opening, our focus will be mainly on identifying and sizing growth levers and exit alternatives. In contrast, if a deal’s objective is to create a close merger, a thorough synergy evaluation will take place to guarantee that incorporating the target brings the growth and efficiency desired.

With this in mind, Integration’s projects are usually conducted as such:

1. Understand the client’s investment thesis
2. Understand the client’s strategy and business operations
3. Evaluate the target’s strategy and business operations
4. Carry out tailored commercial due diligence accordingly to the thesis objective and the level of available information, such as:
   • Market overview, growth opportunities & risks mapping
   • Competence map
   • Synergies and anti-synergies
   • Financial simulation of commercial aspects
   • Exit strategy
5. Financial simulation of commercial due diligence impacts on the thesis

Along this journey, our expertise in Go-to-Market design & implementation and PMI, enables our teams to fairly evaluate growth projections and competencies, as well as to map and estimate synergies and anti-synergies with accuracy. This always considers realistic implementation feasibility based on our experience of previous cases in the industry.