The Art of M&A Strategy: A Guide to Building Your Company's Future through Mergers, Acquisitions, and Divestitures (The Art of M & A Series) - Hardcover

SMITH

Hardcover

ISBN 10: 0071756213 ISBN 13: 9780071756211

Verlag: McGraw Hill, 2011

Inhaltsangabe

Seize the competitive advantage with today's most powerful strategic tool-M&A "Given the influence of technology, globalization, and regulatory change, M&A will continue to shape our industries. For most companies, therefore, the consideration of M&A in strategy is now fundamental." -from the Introduction to Part I The Art of M&A Strategy is exactly what you need to build mergers, acquisitions, and divestitures into your overall business strategy-to make M&A a competitive advantage and avoid landing on the long list of M&A failures. Experts in the field of M&A, Smith and Lajoux demystify this otherwise complex subject by taking you through the types of M&A strategy and the key steps to successful M&A strategy development and implementation. The Art of M&A Strategy is conveniently organized into three sections: Part I presents a range of possible corporate strategy situations and provides the role and rationale for M&A in each, such as building and managing a portfolio, participating in industry consolidation, spurring corporate growth, and using acquisitions to create "real options." Part II outlines how to determine the role of M&A in your strategy-taking into consideration industry context, competitive imperatives, and strategy options-and explains how to find and screen partners, decide whether to buy or sell, and engage the board of directors in M&A decisions. Part III covers M&A as a sustained corporate program, particularly in the context of international growth, outlining the most strategic aspects of post-merger integration, describing how to use advisors throughout the process, and examining core competencies required for successful M&A programs. The authors illuminate the purpose and process of applying M&A with real-world success stories involving Cisco, GE, Google, and many other companies that have leveraged M&A for strategic success. Use The Art of M&A Strategy to create a powerful strategy position for success in today's changing business environment and to seize and hold competitive advantage.

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Über die Autorin bzw. den Autor

Ken Smith has practiced as a strategy consultant for more than 25 years, initially with McKinsey & Company and most recently with SECOR Consulting, where he was also a managing partner and chair. He is an associate professor at the University of Guelph and associate dean of executive programs in the university's College of Management and Economics.
Alexandra Reed Lajoux, chief knowledge officer at the National Association of Corporate Directors (NACD), has three decades of experience in business information and has served as editor for Directors & Boards, Mergers & Acquisitions, and Export Today. She is the author or coauthor of all books to date in McGraw-Hill's acclaimed Art of M&A series.

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Rapid globalization, technological advances, and dramatic changes in public policy have made industry restructuring the “new normal.” In order to compete, M&A must be part of your overall business strategy.

Written by practicing experts in the field of mergers, acquisitions, and divestitures, The Art of M&A series of professional guides is the number-one resource for anyone seeking practical, hands-on advice for planning for and executing successful deals.

Now, The Art of M&A Strategy breaks new ground by providing the tools and techniques to design a business strategy using M&A as a key element. It takes you through all the steps for making optimum use of M&A for corporate success.

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THE ART OF M&A Strategy

A Guide to Building Your Company's Future Through Mergers, Acquisitions, and Divestitures

By Kenneth Smith, ALEXANDRA REED LAJOUX

The McGraw-Hill Companies, Inc.

Copyright © 2012 The McGraw-Hill Companies, Inc.
All rights reserved.

ISBN: 978-0-07-175621-1

Contents

PREFACE
ACKNOWLEDGMENTS
PART I HOW M&A CREATES VALUE IN STRATEGY
Chapter 1 Building and Managing a Portfolio of Businesse
Chapter 2 Consolidation: Value in Cost Synergies
Chapter 3 Expansion Strategy: Value in Revenue Growth
Chapter 4 Real Options in M&A
PART II DEVELOPMENT AND EXECUTION OF M&A STRATEGY
Chapter 5 M&A in Strategic Planning
Chapter 6 Searching, Screening, and Selection
Chapter 7 To Be a Buyer or a Seller?
Chapter 8 The Director's Role in M&A
PART III WHEN THE M&A PROGRAM IS CENTRAL TO STRATEGY
Chapter 9 Global Industry Restructuring
Chapter 10 The Role of Postmerger Integration in M&A Strategy
Chapter 11 Building a Sustainable M&A Program with the Help of Advisors
Chapter 12 M&A as a Core Competence
CONCLUSION
Appendix I.1 On the Success and Failure of Major Deals
Appendix II.1 Suggested Readings in Strategy and Strategic Planning 
Methodologies
Appendix II.2 Wheel of Opportunity/Fit Chart with Illustrative Delphi 
Scoring
Appendix II.3 Information Sources and Tips for Target Screening
Appendix II.4 NACD Guidance on the Board's Role in M&A and Strategy
Appendix III.1 Public Policy and Corporate Growth: Selected SECOR 
Consulting Case Studies Regarding the Role of Public Policy in 
International M&A
INDEX

Excerpt

CHAPTER 1

Building and Managing a Portfolio of Businesses

Even then, we will make plenty of mistakes.

—Warren Buffet

For most companies, M&A activity is optional. For a multibusiness portfoliocompany, however, it is quintessential. Acquisitions drive portfolio companiesas their path to value and sometimes their reason for existence.

A portfolio company is an enterprise composed of multiple corporate entities andinvestments. These "holdings" have usually been acquired, but some may haveresulted from the division of a prior business. This chapter focuses on thoseportfolio companies that maintain these entities as separatebusinesses—these portfolio companies look to add businesses to theportfolio and occasionally sell businesses from the portfolio. Some singlebusiness companies comprise multiple legal entities but are managed as oneoverall company—these are not the subject of this chapter.

We also distinguish portfolio companies from passive investment funds. Portfoliocompanies for our purposes hold all or a majority interest in many of thecompanies in their portfolios, either alone or with partners. As such they(perhaps with partners) effectively control the businesses in the portfolio. Weexclude for our purposes funds that make equity investments but not controllinginvestments (not even with partners). Such companies buy and sell stock and playa passive role in the companies in which they have invested, whereas theportfolio companies buy and sell companies and are often in a position, eitheralone or with partners, to control the companies they hold. (Portfolio companiesmay have such passive investments as well as corporate holdings, but thischapter is concerned with only the latter.)

As noted in the introduction, it is the portfolio companies that dominated M&Ain earlier decades and that have drawn much criticism. In particular, some suchcompanies earned a so-called conglomerate discount from the capital markets.This dubious distinction meant that the market assessed the whole (the portfoliocompany) as being worth less than the sum of the parts (the sum of the market'svaluations of the holdings). In other words, such portfolio companies wereadding negative value.

This raises important questions about the role of corporate centers in theseportfolios, how they can add value, and the role of M&A. In fact, many portfoliocompanies are highly successful and remain a major force in the M&A markets. Wewill use a characterization of management approaches for portfolio companies tolook at how M&A can add value.

ROLE OF THE CORPORATE CENTER

How can portfolio companies add value?

A portfolio company can create value in excess of the value of the individualcompanies in many ways, including the following:

* Reducing risks to the shareholders by diversifying assets

* Improving returns on investments through superior selection of acquisitioncandidates

* Optimizing across holdings the use of tax credits, loss carry forwards, debtmanagement, and other forms of "financial engineering"

* Exploiting skills and synergies available between businesses

* Consolidating assets as in an industry "roll up."

However, how the portfolio company adds value depends on the role andcorresponding skills of the corporate center or parent company. In a portfolioof businesses, the corporate center can add value either by improving theperformance of the units or by making changes to the portfolio. The latter isclearly the role of M&A&—that is, the portfolio can be changed by sellingunits or buying new units.

However, the former also has a bearing on M&A strategy. Unit performance can beimproved by changes in strategy, management disciplines, staff, or access toskills or resources—all of which can be influenced by what else is in theportfolio and/or how the portfolio is managed.

A typology of business portfolio companies can be defined by the differing rolesof their corporate centers.

What roles can the parent company play in a portfolio of businesses?

The roles of portfolio parents—or corporate centers as they areincreasingly called—can vary widely. Michael Goold of the AshridgeStrategic Management Centre and Nathaniel Foote of McKinsey & Company definedfive scenarios for the corporate center based on the degree of businessintegration and the type of parent company intervention. Each scenario suggeststhe strategy to create value.

The controller role applies to a diversified portfolio in which theparent company does not intervene in the individual business, other thanexercising its fiduciary duties on any boards of its holdings, including settinggoals and budgets. The parent company's role is essentially to grow and allocateshareholder capital, usually within defined risk-return parameters. This is donethrough buying and selling of companies or shares of companies and throughmonitoring performance. Berkshire Hathaway Inc. and some of the large pensionfunds are examples.

The coach role may also apply to a diversified portfolio, but there is agreater direct role of the parent in the businesses of the portfolio. The coachaims to help the companies in the portfolio perform better through bettermanagement tools and processes. The application of Six...

Details zur Ausgabe

• Verlag: McGraw Hill
• Erscheinungsdatum: 2011
• Sprache: Englisch
• ISBN 10: 0071756213
• ISBN 13: 9780071756211
• Einband: Gebundene Ausgabe
• Anzahl der Seiten: 368
• Kontakt zum Hersteller: McGraw-Hill Education; https://www.mheducation.co.in/; ; Via Verdi, 8; Assago Milano; 20090; Italien